ZenithOptimedia Cuts Global Advertising Growth Outlook for 2011 From 4.1% to 3.6%
The media buying firm slightly pushed up its U.S. ad forecast to a 2.2 percent gain this year despite economic concerns, but predicted slight network TV declines this year and next and reiterated that it would take several years for U.S. ad spending to reach pre-recession levels.
NEW YORK - Global advertising spending will rise 3.6 percent this year to $466.3 billion, media planning and buying firm ZenithOptimedia predicted on Monday, lowering its outlook from a 4.1 percent gain that it had projected in July.
It cited "a modest slowdown in expenditure growth towards the end of the year" amid soft economic trends. This summer, the company had projected global ad spending would reach $471 billion for all of 2011, on par with the peak level reached before the latest recession.
However, on Monday, it also slightly raised its expectation for major media spending in the U.S. this year from 2.1 to 2.2 percent amid continued ad momentum, particularly in cable TV and Internet spending. The company slightly revised its U.S. estimate for network TV momentum this year though from flat to a 2 percent decline, which it expects to be followed by a 1 percent drop next year.
ZenithOptimedia forecasts $155.0 billion in U.S. major media ad spending this year, $160.3 billion in 2012 and $166.0 billion in 2013. "As we move further past the recession, we expect larger increases of 3.5 percent in 2012 and 2013" in the U.S., Zenith said in its latest forecast. That is slightly better than its previous projection of gains of 3.5 percent and 3.2 percent, respectively, in the next two years.
But it reiterated its expectation that it would take several years for U.S. ad spending to reach the level it was at in 2008. Previously, Jonathan Barnard, head of forecasting at ZenithOptimedia, had said that the U.S. ad market is unlikely to reach the 2007 spending level of $177.7 billion until 2015 or 2016.
This summer, the company, which is part of advertising giant Publicis Groupe, had already slightly lowered its April global ad growth forecast of 4.2 percent. "The slowdown in economic recovery in the developed markets, coupled with rising fears of double-dip recession, have caused some advertisers to trim back budget increases planned for the end of 2011, but there has been no sign of the cancelled campaigns and sharp budget cuts that signaled the beginning of the last advertising downturn in 2008," Zenith said on Monday.
The company also cut its growth forecast for 2012 from 5.9 percent to 5.3 percent, while calling that outlook "reassuring." It added: "This picture is consistent with a history of ad market growth after many previous stock market shocks, assuming the world economy does not deteriorate dramatically."
2012 is a quadrennial year and will benefit from the Summer Olympics in London, the European soccer championship and the U.S. presidential elections. The company estimates that they will add $6.2 billion to the global ad market next year. Growth next year will also benefit from Japan’s recovery from the earthquake in March, which could account for an additional $800 million, according to Zenith.
For 2013, the firm slightly reduced its global ad growth outlook from 5.6 to 5.5 percent, which would bring global ad spend to $518.2 billion.
Zenith highlighted that global Internet ad spending will exceed newspaper spending in 2013 with $96.4 billion in expenditures, compared to $91.3 billion. "Overall, we predict internet advertising will increase its share of the ad market from 14.4 percent in 2010 to 18.9 percent in 2013, when it will overtake newspapers to become the world’s second-largest medium," the firm said.
For the U.S., Zenith this year predicts the largest increases in ad spend on the Internet (12.6 percent, followed by 16.2 percent in 2012 and 17.3 percent in 2013) and cable TV (12.0 percent this year, 10.0 percent in 2012 and 10.5 percent in 2013). "Online ad growth is being driven, in part, by online video, with video ads becoming the main form of brand advertising in the digital space," Zenith said.
Network TV spending will continue trending lower next year despite the return of the Olympics to NBC, it suggested. "With the Olympics taking place in London, the time difference will mean fewer events airing live than there were for the Vancouver Olympics," the firm explained.
Zenith also expects cinema advertising expenditures to see a 6.0 percent increase in 2011 and 5.0 percent gains in 2012 and 2013.