MediaPost Publications Zenith: Online to Grow 29% Globally This Year 07/03/2007

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Zenith: Online to Grow 29% Globally This Year

by Les Luchter, Tuesday, July 3, 2007, 6:00 AM

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Zenith Optimedia has predicted slow but steady growth in total global advertising budgets for 2007, with a 3.7% increase over last year -- but a 29% growth in Internet spending -- to $33.5 billion.

In 2008, Zenith sees 23% growth in online ad budgets to $41.2 billion, and then a continued slowing of the growth rate in 2009 - up 15% to $47.4 billion. But the overall projected growth rate for online spending from 2006 to 2009 comes out to 82%, while the rest of the ad market will only grow by 13%.

Broken down by share of ad dollars, Internet budgets will rise from 6.1% last year to 7.4% in 2007, 8.6% in 2008 and 9.4% in 2009, according to Zenith. Just three months ago, the agency placed the last figure at just 8.6%. Zenith attributed the revised projection to the recent "strong growth in online video ads and local search."

Significantly, according to the global projections, Internet's share of the global advertising pie will pass radio's in 2008, leaving only television, newspapers and magazines ahead of online.

Domestically, Zenith didn't revise its forecast, which remains at 29% growth for 2007, 19% for 2008, and 7.5% for 2009, but made several observations:

Blue chip marketers will continue to shift ad budgets toward digital media as they begin to fully embrace online as a necessary marketing vehicle.

Online video opportunities will evolve from within as major outlets develop these platforms more easily for marketing purposes.

Search Engine Marketing (SEM) is also expected to experience continued growth as more small businesses embrace online as part of their overall local marketing strategies.

In 2008, political candidates are expected to embrace online opportunities more than in years past. Candidates have become well versed in the power of conversational media, buzz and blogging to shift favorability over a short period of time

Global advertising expenditure by medium

US$ million, current prices Currency conversion at 2006 average rates.

	2005	2006	2007	2008	2009
Newspapers	120,367	125,043	127,916	131,369	135,011
Magazines	52,722	54,616	56,397	58,618	61,152
Television	151,191	161,389	168,988	180,318	188,759
Radio	34,225	35,225	36,283	37,461	39,064
Cinema	1,717	1,794	1,908	2,096	2,320
Outdoor	21,944	23,948	25,685	27,615	29,718
Internet	19,419	26,031	33,465	41,197	47,436
Total *	401,585	428,047	450,642	478,673	503,460

Source: ZenithOptimedia

* The totals here are lower than the totals in the 'Advertising expenditure by region' table above, since that table includes total adspend figures for a few countries for which spend is not itemised by medium

Share of total adspend by medium 2005-2009 (%)

	2005	2006	2007	2008	2009
Newspapers	30.0	29.2	28.4	27.4	26.8
Magazines	13.1	12.8	12.5	12.2	12.1
Television	37.6	37.7	37.5	37.7	37.5
Radio	8.5	8.2	8.1	7.8	7.8
Cinema	0.4	0.4	0.4	0.4	0.5
Outdoor	5.5	5.6	5.7	5.8	5.9
Internet	4.8	6.1	7.4	8.6	9.4

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