But U.S. Rate to Lag Due to Slower Print Spending

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NEW YORK (AdAge.com) -- Global advertising expenditures will increase 5.9% to $427 billion in 2006 from $403 billion in 2005, according to an analysis by Publicis Groupe’s Zenith Optimedia released today.

Growth in Internet ad spending continues at a double-digit rate, although the 23.6% spending increase, to $22 billion, expected in 2006 is down from the 28.7% increase online media recorded between 2004 and 2005. Zenith said of the $18 billion spent globally this year on Internet advertising: “If it were a country it would rank top five in size and growth -- like a Western Europe giant growing at an emerging Asia rate.”

U.S. spending projections
For the U.S., Zenith revised its 2006 spending projections down, from 5.7% to 5.1%, largely because of slower-than-anticipated growth in magazines and newspapers. Zenith revised downward magazine spending from a 7% increase to an increase of 5.4%. Overall, U.S. spending is expected to reach $175 billion.

Spending on network TV and radio will be relatively flat, out-of-home will increase 5% and Internet ad spending will drive overall growth. Zenith revised its projections for online spending upward from 12.5%t to 22%. The reasons: a large increase in search advertising, overall cost-per-thousand-viewer increases as technology becomes more targetable, and increased streaming of video and video on demand.

Worldwide spending, 2007
For 2007, worldwide spending is projected to be flat to slightly down vs. 2006, with a 5.7% change to $451 billion from $427 billion. Zenith’s ad spending projections are in line with long-term trends in the world economy. By 2008, spending will pick up a bit with a 6% rise over the previous year.

By geographic region, spending in Africa and the Middle East is projected to grow the most, as a percentage of spending. Zenith predicts spending for the region will be $24 billion next year, up 16.3% from this year. Europe’s increase, at 4.6% to $113 billion, is the smallest change. North America will be only slightly better, at 5.1% or $182 billion, compared with 2005. At 8.1%, or $19 billion, Latin America will beat out Asia/Pacific’s 6% growth to $87 billion next year. But that’s a significant decline from the 17.3% growth Latin American posted from 2004 to 2005.

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