The severe slump in the U.S. ad market will continue into next year, according to leading ad industry seers who, in recent weeks, have lowered their spending projections for most categories. Internet advertising remains the one bright spot in the otherwise bleak picture. Total U.S. ad expenditures this year are now expected to be up just 2.0% to $285.1 billion, said Robert J. Coen, senior VP-director of forecasting for MAGNA, who delivered his midyear presentation on ad spending last week. That is an adjustment down from his prediction last December that ad spending would be up 3.7% this year. “The outlook for U.S. advertising is not good,” Coen said, noting that economic expectations have seriously weakened since December. He characterized the industry as being in a “severe slump.” Coen also released final numbers for 2007, saying ad spending fell 0.7% to $279.6 billion. He had predicted a 0.7% gain. It was the first year that ad spending declined since 2001, he said. Projections for 2009 are not much better. In his first forecast for next year, Coen predicted U.S. advertising would increase 3.1% to $294.0 billion. “I don't think 2009 is going to be a great year,” he said. “We don't look for big improvement. It can't get much worse.” Declines have hit certain media harder than others, especially newspapers and local advertising overall. “To me, the surprise was that newspapers got so much worse,” Coen said. In the first quarter, newspaper ad spending fell 9.5%, with classified down 24.9%. London-based media agency ZenithOptimedia, a part of Publicis Groupe, was similarly downbeat in its predictions two weeks ago. After making adjusted forecasts in May, the agency said growth projections have been downgraded again for North America (from 3.7% to 3.5%) and Western Europe (from 3.9% to 3.7%). Both Coen and ZenithOptimedia blamed the credit crunch and economic uncertainty for the sluggish outlook. Prospects are better overseas, with some countries faring better than others. Argentina (30%), Russia (23%), China (12%) and Brazil (10%), are all expected to see double-digit growth in ad spending this year, Coen said. ZenithOptimedia said it adjusted its global numbers upward. The forecast for global ad spending this year, excluding North America and Western Europe, is for an increase of 11.1% to 11.8%. “The rest of the world, in stark contrast, is exhibiting even more strength than it was three months ago,” said Jonathan Barnard, head of publications for ZenithOptimedia. China, Russia and Brazil are particularly strong in terms of ad spending growth, according to Zenith. Emerging media ad spending—which includes search, social media, online video and mobile—will grow 29.5% this year to $14.9 billion, and 25.8% next year to $18.8 billion, according to MAGNA. Coen's colleague, Brian Wieser, senior VP of MAGNA, compiled the online figures. Online video spending is expected to grow 54.2% this year and 45% in 2009. “Online video will be the fastest-growing emerging medium next year,” Wieser said. “This is the one that gets most large marketers excited. It's the most similar to what they already know.” He said availability of creative assets, low unit costs versus traditional TV and creative media opportunities will all spur that growth. ZenithOptimedia said economic uncertainty in developed markets is accelerating the shift of budgets to Internet advertising. It expects Internet advertising to grow 26.7% this year and break the 10%-share barrier, a year earlier than its forecast three months ago. Other industry experts also see online's share increasing. GroupM, parent company of WPP Group media agencies MAXUS, MediaCom, Mediaedge:cia and MindShare, released a study last month that projected digital's share of total ad investment will rise to 13% this year and 15% in 2009. Credit Suisse, IDC and JupiterResearch have issued similar estimates of online spending as a share of total advertising spending: Credit Suisse pegs this year's percentage at 12%. IDC sees online garnering 10.4% of total advertising spending this year and 12.1% next year. JupiterResearch estimates online will have a 9.6% share this year and 10.7% next year. “U.S. advertisers have found that online reaches a very wide scale of customers for a relative bargain compared to TV and print,” said Emily Riley, senior analyst at Jupiter Research. “We're not seeing TV money being taken away. That's still the dominant medium. As budgets grow, though, a larger percentage of new budgets will be dedicated to the Web.” David Hallerman, senior analyst at eMarketer, agreed. “It's where the audience is found,” he said. “It's underdeveloped as a branding tool, and it's very strong and effective with direct response through search. The effectiveness of paid search is a large factor contributing to the growth.” Hallerman added: “It's not a surprise that its share of the whole pie will increase by at least one or more points year after year because of the many ways it can be used.” IDC pegs online spending at $28.9 billion this year. “Essentially what will happen is the economic crisis will accelerate and marketers will move budgets from traditional media to the Internet,” said Karsten Weide, an analyst at IDC. “It's nothing less than a media revolution.” M