Global Ad Spending Remains Resilient -- Albeit Somewhat Muted

Russia, Brazil and (Less so) China Buoy Outlook

By Published on .

As 14 million Americans continue to hunt for work, their Congressional representatives are negotiating how much more (or less) money the government will be allowed to spend, presenting a fiscal crunch coming from both ends of the economy. Add to that the world's economies facing down one crisis after another: Japan earthquake; Arab spring; Greek collapse; China inflation; India corruption.

Despite these spasms, the global economy is now being propped up by emerging nations like Russia, Brazil and, in yet another sign of its significance, China, though not quite as much as one would think. Economists expect a slight increase in domestic and global growth in the latter half of the year, a pink-hued outlook that will help global ad spending. Expect a slight uptick in ad dollars, but only slight.

"From our last focus from April, our expectations slightly increased in most regions," said Jonathan Barnard, head of forecasting at ZenithOptimedia, who anticipates global ad spending to rise 4.2% this year, down a bit from an earlier forecast due to the earthquake in Japan and the uprisings in Middle East states.

Mr. Barnard expects these events to chip away a bit at overall ad growth, but said he believes they will not have a long-term effect. "Japan obviously caused a lot of damage, leading to about a month or so of no television advertising," he said, "but it didn't have much of an effect on long-term expectations."

Absent the dire events in Japan that rocked the island nation in early March and the uncertain situation in Egypt, the largest economy in that region, Mr. Barnard estimated global ad spending would have been slightly higher, up to 4.7% or 4.8% this year.

As the U.S., Western Europe and Japan lag in spending, global growth in advertising over the next few years will be driven by emerging markets, with China accounting for $10.79 billion in new ad spending from 2010 to 2013, compared to Russia's $6.88 billion and Brazil's $3.32 billion. Total global ad spending will grow by $73.6 billion in the same period, and the U.S. is expected to account for 19.3% or $14.24 billion in new advertising outlays, making it the biggest spender by far, while at the same time representing a 3% to 4% annual growth rate.

Even as China is expected to be the second-biggest contributor of new ad dollars through 2013, its ad spending as a proportion of its gross domestic product is extremely low. "It's because the consumer economy isn't there yet," Mr. Barnard said. "We expect that in a market like China, at some point advertising should be around 0.7% or 0.8% of GDP, but in China it's 0.4% and we're projecting it will be at around 0.43%% into 2013, so that 's hardly explosive growth."

Most Popular
In this article: