Ad Report: Digital Gain, More Pain

Michael Hedges June 19, 2012 Follow on Twitter

Ad spending growth forecasts are positive, just not so much. Continued economic uncertainty makes for lower expectations. And big diversions, whether sports or elections, aren’t making much of a difference. The winner, of course, is digital advertising.

Revised ad spending forecasts from big media buyer ZenithOptimedia (ZO) are less than optimistic for Europe and slowing for much of the rest of the world. The global forecast for 2012, which ZO revises quarterly, shows ad spending rising 4.3% against 2011 to US$ 502 billion, lower than the previous quarterly forecast of 4.8% growth. “This upgrade is a result of two factors: signs that large companies are investing more in marketing to drive growth, and a reduced risk of disastrous collapse in the Eurozone, even though its short-term economic performance has deteriorated,” said the ZO statement (June 19).

The growth forecast for Western Europe was lowered to 1.5%. Ad spending growth in Central and Eastern Europe will also slow, to 6.5% in 2012 from last quarter’s forecast of 8%. ”The Greek elections have revived fears of a Eurozone breakup prompting investors to withdraw from risky investments,” said the ZO statement. ”Economic growth has slowed across the developed world and recessions have deepened in Southern Europe. In several developing countries, growth has slowed due to gradually declining exports (but is) generally more stable than in developed countries.”

ZO forecasts declines in ad spending of 5% in Italy, 10.4% in Portugal, 12% in Spain and 19.5% in Greece. Overall Eurozone ad spending, says ZO, will fall 1.1% in 2012. Economists generally view ad spending as a lagging indicator of economic growth.

Ad spending growth in Latin America and the Asia/Pacific region is also predicted to slow, though still leading the overall trend. ZO had projected 9.2% ad spending growth in the March forecast. That has been pared down to 7.8%. Similarly, Asia/Pacific ad spending growth for 2012 is expected to be 6.7%, down from 7.4% in the previous report. The ad spending growth forecast for the United States is unchanged at 3.6%, largely on 2012 election year spending.

Ad spending growth in the UK, according to ZO, will tack upward at 3.5%, slightly better than the March forecast. UK TV advertising will barely grow at all, 0.5%, even with the London Olympic Games. Into double digits is the growth of internet advertising, 10.3% in the new forecast over 9.3% last March. ZO predicts that Brazil will overtake the UK in ad spending by 2014.

The parade of big sporting events this year will not move the ad spending needle in Poland, co-host of the UEFA Euro 2012 championships. Ad spending in Poland will be 0.7% lower than 2011, reversing the March forecast of 1.95 growth. “We have reduced earlier estimates due to less optimistic information from the market,” said ZO Poland research director Anna Marszalik-Kraszewska, quoted by wirtualnemedia.pl (June 19).  TV advertising in Poland will fall 0.3% because of advertiser concerns about over saturation. Internet advertising in Poland will grow 11.5%.

The growth of internet advertising will continue unabated. By 2014, says ZO, internet advertising’s market share will exceed 30% in Australia, Canada, South Korea, Norway, Sweden and the UK.  Between 2011 and 2014 35% of all ad spending growth will come from China, Brazil, India and Russia.

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