Group M Revises Media-Spending Forecast Downward

For '09, Predicts Much Bigger Pullback of 4.3% in U.S.

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NEW YORK (AdAge.com) -- WPP's Group M announced today that it has revised its measured-media-spending forecast for 2009, and the news isn't good. The media unit predicts that global measured media spending will drop 4.4% to $425 billion, a much bigger drop than the 0.2% it predicted back in December.

Adam Smith
Adam Smith
The group said it expects a near identical drop of 4.3% to $155 billion in measured media spending in the U.S., rather than the 3% it predicted in December. Looking forward, Group M said the industry could see a drop of 6.8% in the U.S. in 2010.

London-based Adam Smith, futures director at Group M, said in a statement: "The 2008/2009 period is now a more serious advertising recession, in scale, duration and relative to the global economy, than the extraordinary 5.1% real-terms post-dot-com global advertising correction of 2001."

Rino Scanzoni, Group M's chief investment officer, said in a statement that the further and more severe drop projected for the U.S. in 2010 was a direct result of marketing budgets that were "devised in the throes of the current recession." He also said the stimulus package put forward by the government will not have an immediate positive impact on ad spending "because it does little to drive consumer spending in the face of high unemployment, a weak housing sector and a resurgence of commodity inflation in the short run."

Overseas, Western Europe is looking at a 6.7% drop in ad spending in 2009, according to Group M, a significant change from the 1.7% it offered up in December. The group said Germany is proving to be the most resilient market in the region.

China, one of the few areas where growth is expected, also took a hit in Group M's revision. Its 2009 forecast for spending in China dropped to 3.2% growth from the 13% it forecasted in December. Group M attributed the decline to "consumer retrenchment and a credit crunch in retail distribution, which government stimulus might alleviate."

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