Two Ad Firms Reduce Forecasts for 2012 Global Ad Spend

MagnaGlobal says the Euro crisis has left Western Europe "shaken," but the rest of the world "shows resilience."


Two prominent advertising prognosticators have scaled back their forecasts for global ad growth this year amid economic and financial challenges in EU countries.

Advertising firm MagnaGlobal has reduced its global ad spending growth forecast for 2012 to 4.8 percent from 5.0 percent, saying that the Euro crisis has left Western Europe "shaken, but [the] rest of the world shows resilience." MagnaGlobal forecast $480 billion in global ad spend this year. "The U.S. remains the largest market with $152 billion," with Japan, China, Germany and the U.K. completing the top five, it said.

Meanwhile, media planning firm ZenithOptimedia forecasts global ad growth of 4.3 percent this year to $502 billion, down from its previous prediction of 4.8 percent, as the Euro zone faces a 1.1 percent decline and Western Europe growth of only 0.4 percent.

"Growth slowed in April and May as advertisers became more cautious about the world economy," the company said. "Growth to pick up during the major sport events from June to August [including the current Euro 2012 soccer tournament and the London Olympics], and in the run up to November elections in the U.S." Overall, it said the quadrennial sports events and U.S. elections will add $6.3 billion to global growth this year,

Magna highlighted that emerging markets now account for 25 percent of global advertising revenue, outpacing Western Europe's 23 percent. The emerging markets will grow to represent 33 percent of global ad revenue by 2017, it forecast. In 2013, Brazil will outrank U.K. to become the fifth-largest ad market, and Russia will overtake Italy as the 10th largest market. By 2017, China will rank second, Brazil fourth, and India seventh, according to Magna.

Most of Western Europe, where ad spend will decline 0.2 percent this year, is suffering another year of lower advertising "amidst economic slowdown, political uncertainty and fiscal austerity," Magna said. Notable exceptions include Germany (set to grow 1.7 percent) and a U.K. market (+2.4 percent) boosted by the London Olympics, MagnaGlobal said.

"The two big events of 2012 - the Queen's Jubilee and the London Olympics - have proved even stronger than anticipated, boosting marketing activity and advertising spend in the first half of the year," it said about the U.K.

North America is in better shape, with U.S. ad revenue set to increase 4.0 percent, Magna said. Without an estimated $2.5 billion in incremental political spending and $630 million in incremental Olympic ad spend, U.S. ad revenue would rise a more modest 2.3 percent, it said.

Zenith similarly said that the U.S. economy “is in a much better place than it was three years ago.” It predicted 3.6 percent growth in the U.S. this year and 3.8 percent next year.

Meanwhile, global TV ad spending will benefit from the “quadrennial” events of 2012 - the U.S. presidential election and Summer Games, Magna said. It will expand by 5.2 percent, compared with Internet ad growth of 13.5 percent to nearly $100 billion, which will make the Internet outgrow newspapers to become the second-biggest media category with a share of around 20 percent, Magna said.

For 2013, Magna is expecting a slightly lower growth rate of 4.5 percent followed by a re-acceleration in ad spending in the 2014-2016 period "based on macro-economic forecasts." Zenith expects 2013 growth of 5.3 percent followed by a 6.1 percent improvement in 2014.

Twitter: @georgszalai