Forecast dims for ad growth

ZenithOptimedia cites credit crunch, downturn

Media buying giant ZenithOptimedia on Monday reduced its 2008 advertising spending forecast for North America and Western Europe, citing the continued fallout from credit crunch and economic sluggishness.

However, Zenith increased its global ad spend growth estimate for the year from 6.5% to 6.6%, thanks to better-than-expected momentum in emerging markets.

It also now forecasts that Internet advertising will break the 10% global market share barrier this year -- one year ahead of its previous projection. Online spending will expand its share to 13.6% in 2010, well ahead of Zenith's previous prediction of 12.3%.

Not only does Web advertising continue to run ahead of expectations, but it also is being helped by economic uncertainty, which "is accelerating the shift of budgets to accountable Internet advertising," Zenith argued.

North American spending on major media will rise 3.5% this year to $195 billion, the company projects. In March, it had predicted a 3.7% gain. For the U.S., its forecast was trimmed to3.4% from 3.7%.

For Western Europe, Zenith eyes a 3.7% increase, down from its 3.9% expectation a few months ago, to $124.4 billion.

Worldwide, however, Zenith now forecasts that the rest of the world will boost ad expenditures 11.8% to $517.5 billion, better than its 11.1% earlier prediction. The so-called BRIC countries -- Brazil, Russia, India and China -- are key growth markets.

Developing markets will contribute 62% of ad expenditure growth between 2007 and 2010 and increase their share of the global ad market from 27% to 33%, it projects.