• by Joe Mandese  @mp_joemandese, April 14, 2009

The Internet is the only medium expected to reap advertising increases during 2009, according to the latest edition of ZenithOptimedia Group's quarterly tracking study on the advertising economy. The report, released early this morning, reflects a dramatic downward correction by the Publicis media unit, which now predicts the global ad economy will slide 6.9% during 2009 vs. only a 0.2% drop predicted in its last report released in December 2008.

Citing the continuing weakness in the global economy, ZenithOptimedia said it anticipates the rate of the global ad recession will begin to moderate by year-end, and will actually post a modest recovery in 2010, albeit against extremely weak 2009 comparables.

"Since we released our last forecasts in December the global ad market has taken a substantial turn for the worse. Trade has fallen off rapidly, dragging many developing markets into the downturn. Our last forecasts predicted declining ad expenditure in North America and Western Europe in 2009. We now predict a steeper decline in these regions, with all regions joining in the general decline. We forecast global ad expenditure to shrink by 6.9% over the course of 2009," the report reads.

"We are currently in the middle of a period of steep deterioration in ad expenditure. The downturn began in third quarter 2008, accelerated in the fourth quarter, and first quarter 2009 was at least as tough as the preceding quarter. As we enter the second quarter, there is limited long-term visibility in the market as most advertisers wait until the last moment to confirm their spending commitments. Many are treating advertising as a discretionary expense, and one they find convenient to cut. Ad expenditure correlates strongly with corporate profits, and the ad market is unlikely to start its recovery until profits start to pick up again."

ZenithOptimedia attributed the Internet's resilience to "its accountability and innovation in ad formats," as well as the continuing success of search, and predicted online ad expenditures will rise 8.6% this year. While that is down sharply from 2008's growth rate of 20.9%, it nonetheless represents growth while all other major media are sliding.

"Consumers considering a purchase are using search more as they seek out the very best deals," the report cites. "In the U.S. we predict search advertising to grow 9.0% in 2009, while classified grows just 1.8% and traditional display shrinks 1.8%. New formats are enjoying greater growth (29.8% from internet video and rich media, 29.7% from internet radio and 11.9% from podcasts), but these represent only 12% of US internet expenditure between them."

When consumer and corporate confidence rebound, ZenithOptimedia said the Internet would once again resume double-digit rates of ad spending growth, and the agency now calls for the online ad economy to expand 11.3% in 2010, and 15.3% in 2011.

"We expect its share of the ad market to rise to 14.6% in 2011, up from 10.4% in 2008," the agency said.

Based on ZenithOptimedia's ongoing tracking, the Internet will become the ad industry third largest medium this year, surpassing magazines, and placing just behind TV and newspapers.