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In 2002 ad spending is expected to grow again-except in the U.S., which will drag down the rest of the world for the second year in a row. This year, worldwide ad spending growth of just 0.8% won't even reach single digits due to a predicted 1.3% fall in North America, according to Zenith Optimedia Group, the London-based media specialist owned by Publicis Groupe and Cordiant Communications Group.

Despite economic and political collapse in Argentina, notoriously unpredictable Latin America is expected to increase ad dollars this year by 4.4%, the highest regional growth rate, Zenith predicts. David McMurry, an analyst at Credit Suisse First Boston, noted that if Argentina's dire predicament continues, "We see a potential [earnings per share] impact of 1% to 1.5% [on advertising holding companies]."

European ad spending is forecast by Zenith to rise by 1.7% in 2002 and 3.9% the following year, up from a 2.1% decline last year. Europe's largest economies were hit by big drops as time and space buys from telecommunications, dot-coms, financial, corporate and many other clients dried up; only a modest recovery is likely this year. In the U.K., for instance, the plunge in TV advertising accelerated to 17% in the fourth quarter of 2001, but Zenith predicts growth of 2.3% this year. In further signs of weakness, recruitment advertising fell by 20% in 2001 in Germany, Europe's biggest market, and the French are negotiating bigger discounts off print and TV rate-card prices.

In Asia, ad agencies and their clients are still lean from a tough Asian recession that lasted from mid-1997 through mid-1999. Zenith forecasts regional growth at 2% in 2002 and 4.3% in 2003, up from a 1% decline in 2001.

"Anyone who can accurately predict what will happen to the Asian economy [in 2002] would be worth their weight in transistor chips," said Eric Rosenkranz, CEO, Asia Pacific, Grey World-wide, Hong Kong. "There is speculation that the region will recover three to six months after the U.S. I think we have bottomed out but need to be prepared for a long time on the floor. By market, India and Korea are looking best, Japan and Australia are next [and] Southeast Asia is flat."

China's 2001 entry into the World Trade Organization will pit local brands against multinational marketers as trade barriers fall.

"One seismic shift that appears to be happening, albeit at a glacial pace, is local brands threatened by the WTO are now into brand equity bolstering," said Tom Doctoroff, area director of Northeast Asia and CEO, China, at J. Walter Thompson Co., Shanghai. "Perhaps only 10% of companies truly recognize this need but they represent the cutting edge. This is seen not only in terms of more stable relationships with multinational advertising agencies but also their frequent requests for brand-equity seminars."

Around the world many advertisers will find money to spend on the Winter Olympics and World Cup soccer in the summer. In Brazil alone, "We expect at least [$100 million] more in the media between January and May due to the World Cup," said Daniel Barbara, commercial director at local agency DPZ, Sao Paulo. Some beliefs defy traditional forecasting. In Brazil, for instance, years ending in an even number are better than odd ones, Mr. Barbara said.

Contributing: Claudia Penteado

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