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UBS Media Conference News

Forecast for 2009: It Could Have Been Worse

Group M, ZenithOptimedia Expect Global Ad Spending to Decline 0.2%

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NEW YORK (AdAge.com) -- Considering the economic uncertainty that has gripped nearly every global market and the fact that a major U.S. industry may end up driving off a cliff, taking millions of jobs and billions of advertising dollars with it, it could have been a lot worse. At today's UBS Media Conference, ZenithOptimedia and Group M both forecast global ad spending on measured media will experience no growth in 2009, the first time in years, and will instead decline 0.2% compared to 2008.

ZenithOptimedia projects global ad spending will hit $490 billion next year, down from $491 billion. Group M's estimate is $458 billion for 2009.

U.S. looks worst
When broken down by region, the numbers are a little more worrisome. In ZenithOptimedia's report, North America is expected to decline 5.7%, with a 6.2% drop in the U.S., while Western Europe drops 1%. Asia Pacific (up 3.2%) and Central and Eastern Europe (up 1.5%) are still expected to grow, albeit at a slower rate than was previously estimated.

Latin America (14.9%), bolstered by very strong growth in Brazil (30%), as well as Africa, the Middle East and the rest of the world (11.2%) will not only show growth in 2009 but exceed the impressive numbers they posted in 2008, according to ZenithOptimedia. Like Brazil, the remaining BRIC countries of Russia (5%), China (9%) and India (13%) are also expected to post impressive growth numbers in 2009.

ZenithOptimedia projects a "very tough" global ad market for the first half of 2009 but is anticipating a "mild" turn for the better starting in the third quarter with year-on-year comparatives starting "to get a lot easier" in the fourth quarter.

Developing nations expand share
Throughout 2010, ZenithOptimedia predicts global ad spend will increase 5.5%, to be followed by 5.8% growth in 2011 with developing markets behind most of that increase. "We expect the sharp disparity of growth rates between the developed world (which we define as North America, Western Europe and Japan) and the developing world (which we define as everywhere else) to continue," it said in a statement. "We estimate developing markets will contribute 89% of all ad expenditure growth between 2008 and 2011, and increase their share of the global ad market from 30% to 36% over this period."

Despite all the talk about newspapers (23.8%) and TV (38.3%) losing their appeal as ad media, ZenithOptimedia expects both to still garner the lion's share of ad dollars in 2009. Not surprisingly, as marketers look for cheaper and more measurable ways to market, the overall ad spend against web advertising is expected to increase to 12.1% in 2009, up from 10.3% in 2008.

ZenithOptimedia believes the global ad spend on web advertising will jump to 15.6% by 2011. It's also forecasting "substantial growth" for cinema and outdoor advertising in 2009.

In its study "This Year, Next Year," Group M said the global decline in spending is the first since 2001. Its numbers for U.S. activity are less ominous at -3.2% growth, but its projections for Western Europe (-1.7%) are slightly worse than ZenithOptimedia's. Group M is also predicting a strong 2009 for Latin America (8.1%), though down from 9.9% in 2008. The Middle East and Africa are estimated to show 8.7% growth, but that is also down considerably from 2008 (15%), according to Group M.

Tight spending
"Advertisers are scrutinizing every penny," said Adam Smith, Group M futures director, who oversees all of Group M's "This Year, Next Year" reports. "The automotive and financial services categories have obviously seen weakness across 2008, and retail will be under pressure as we move beyond its busiest fourth-quarter into 2009. Among our own client base we are not seeing wholesale cancellations, but we are seeing migration from expensive and less-tried-and-true media to value and certainty."

While Mr. Smith called out internet ad spending as the only "significant growth area," at 5% for 2009, he added that spending is still down compared to the expected 16% growth in 2008. Group M expects global web ad growth to slow from 22% in 2008 to 10% in 2009, which represents $5 billion growth reaching $59 billion or 13% of measured media investment.

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