U.S. AdSpend Stumbles, But The World Marches On

Updating global ad forcasts, ZenithOptimedia provides new projections that lowers US advertising growth from the previous 3.3% in 2007 to a now expected 2.5% primarily due to a credit squeeze and continued slump in housing market.

Additonally, the report notes that in spite of the many challenges that television faces: the spread of PVRs; migration of viewers from premium mass-audience channels to cheaper specialist channels; and competition from the internet, television will increase its share of global ad expenditure from 37.9% in 2007 to 38.2% in 2008, an all-time record.

The report suggests that the Olympic Games will help lift television's share of the global ad market in 2008, while Online video and local search will drive a 30% growth in internet ad expenditure this year - nine times faster than the rest of the ad market

The report says that In 2008 television's share of ad expenditure will fall 0.3 percentage points to 32.4% in North America, and 0.5 percentage points to 30.4% in Western Europe. In the rest of the world, however, television tends to attract a much higher share of ad expenditure. The Olympics in Beijing are expected to give an extra boost to television in 2008, particularly in China and its neighbors.

The forecasts for internet advertising have been revised upwards. The report now forecasts 29.9%% growth this year (up from 28.6% three months ago) and 85% growth between 2006 and 2009 (up from 82%). Online video and local search are the new, fast-growing segments, but display, classified and the rest of search are still growing rapidly as well. Internet advertising is expected to account for 9.5% of all expenditure in 2009, fractionally up from the 9.4% forecast three months ago.

Newspapers are suffering the most from the depredations of the internet, which is better at delivering timely news and is an efficient substitute for newspaper classifieds. The study expects newspapers' share of world ad expenditure to fall from 29.0% in 2006 to 26.2% in 2009. By contrast, outdoor is in rude health, and is forecast to increase its market share from 5.6% to 5.9% over the same period.

The continued slump in the US housing market has led to a sharp drop in property and construction advertising, particularly property classifieds in newspapers. This, and the recent credit squeeze, prompted a downgrade in the recent forecast for growth in the US this year from 3.3% to 2.5%.

The forecasts for Western Europe, Asia Pacific and Latin America this year are largely unchanged. Central & Eastern Europe and the Middle East - already the stand-out growth regions - have been upgraded again. The report expects:

• Central & Eastern Europe to grow 18.3% this year (up from 16.9% three months ago)
• Africa/Middle East/Rest of World to grow 17.2% (up from 15.6%)

For more information and access to the complete report, please get the PD file here.