Ad Spending Is on the Rise, but Growth Rate May Slow

What's the Deal? Marketers Are Going Private and Public, Buying and Selling, Focusing on Core Brands

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Credit: 1. Print media defined here by Ad Age as newspapers plus magazines. For this chart, Ad Age aggregated MagnaGlobal's media segments as follows: Broadcast is TV plus radio; print is newspapers plus magazines. Magna includes mobile in internet; and cinema in out of home. More info: Source: MagnaGlobal's 2011 Advertising Forecast (December 2010).

CHICAGO ( -- Marketers in 2011 will boost U.S. ad spending 2.8%, down slightly from 2010's 3.2% growth rate, according to the average of three major media-agency forecasts.

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Worldwide ad spending will grow 5.3% in the new year, below the 5.9% growth seen in 2010, according to the average of three forecasts from Interpublic Group of Cos.' MagnaGlobal, Publicis Groupe's ZenithOptimedia and WPP's Group M.

U.S. ad growth in 2010 turned out better than predicted. A year ago, forecasters figured 2010 U.S. ad spending would be flat or down a bit.

Forecasts for 2011 suggest moderate growth in ad spending, reflecting the economy's slow recovery.

Slow ad growth is a welcome change from the recent past: 2009 U.S. ad spending tumbled 11.9% (average of three media agencies), the biggest drop since the Great Depression.

The 18-month recession officially ended in June 2009. U.S. measured-media spending turned north in first-quarter 2010, the first year-over-year quarterly gain since first-quarter 2008, according to WPP's Kantar Media.

Marketers had a busy year of going private, going public and deal making:

  • Burger King Holdings was bought by private-equity firm 3G Capital.
  • Ford Motor Co. sold Volvo to a Chinese automaker, scrapped Mercury and sold most of Ford's stake in Mazda.
  • Fortune Brands announced plans to spin off or sell much of the conglomerate so it can focus on distilled spirits.
  • General Motors Co. pulled off the biggest initial public offering in history -- a stock sale valued at $23.1 billion, including common and preferred shares -- as it put 2009's bankruptcy in the rearview mirror.
  • Kraft Foods bought British candy maker Cadbury and sold Kraft's frozen pizzas (DiGiorno) to NestlĂ© (Stouffer's).
  • NestlĂ© sold its 52% stake in eye-care products firm Alcon to Novartis.
  • Qwest Communications agreed to be acquired by CenturyLink.
  • Unilever agreed to buy hair-care firm Alberto-Culver Co.

Credit: Includes TV, radio, newspaper, magazine, internet, out of home. MagnaGlobal and Zenith include cinema. Kantar figures are for measured-media ad spending; internet excludes search and broadband video. For future-year forecasts (2011 and beyond), Group M and ZenithOptimedia assume constant foreign-exchange rates and employ inflation predictions from independent sources. Magna's figures are based on its historical estimates and future forecasts of media firms' ad revenue in nominal dollars. Magna's growth rates for 2010, 2011 and 2012 rely on constant 2009 exchange rates. Magna's U.S. and worldwide percent changes are based on its core-media data, which include media defined consistently around the world and exclude direct mail and directories that Magna normally includes in its U.S.-only data sets. Source: December 2010 agency forecasts (Group M, MagnaGlobal, ZenithOptimedia); Kantar Media (measured media). 1. Kantar 2010 for first six months of year.
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