• by December 7, 2000

By Chris Griffin

Make sure your seat belts are firmly fastened, but don't' panic -- there's no need to assume crash position yet.

Zenith, a worldwide media agency, is forecasting that worldwide ad expenditures will be up 8% to $332 billion in 2000, and only 6% may be sustainable for 2001 and beyond.

Of course, certain factors play a pivotal role in this decline. Let's take a trip around the online globe.

All being well, the U.S. will celebrate ten straight years of growth in February 2001. Yet ad spending in traditional media rose 6.1% in 1999, and will, Zenith thinks, rise 5% more in 2000 to $332 billion. The cause - America's stunning productivity gains.

In the first half of 2000, U.S. dot-com spending accounted for 10% of all display advertising, Zenith says. Of the 8% market growth in 2000, half is attributed to dot-com spending. In Europe, however, only a third of the 9% market growth is attributed to dot-com spending and due to this contrast, Zenith believes the U.S. is more highly geared to a dot-com downside.

Zenith estimates 2000 web spending at $6 billion, which is 5% of the projected total ad spending and project that number will grow to 7% by 2003, noting that the U.S. will still account for over two-thirds of the world's future Internet ad spending.

In the Asia Pacific region, Zenith forecasts growth rates of 5.9% for 2000 and 6.0% for 2001, as barely changing. It seems that in this part of the world, underlying economic growth is no longer sufficient to propel regional advertising any faster than the rest of the world. For example, Japan's economy seems to be waking up since the real GDP growth is at 1.5% for 2000, but ad spend is nevertheless shrinking. Zenith does not expect resurgent consumer confidence any time soon, and their forecast for 1% real ad growth in 2001 has remained unchanged over the last two years.

Europe, however, is a different story. Zenith says the world should expect Europe to turn in major-media spend of $87 billion this year, 8.6% ahead of 1999. Zenith believes European advertisers will spend $935 million on Internet ads this year, more than doubling the 1999 total. En toto, 56% of world Internet spend, excluding the U.S., will add to Europe's 48% share of all non-US advertising. Expect this figure to double again next year to just under US$2 billion, increasing Europe's ex-U.S. Internet share to 64%, Zenith says.

John Perriss, chairman and chief executive of Zenith Media Worldwide, says: "We have seen the peak of an extraordinary advertising expenditure cycle which has been driven by real economic growth and unprecedented innovation in marketing and media. This has laid the foundations for consolidation. Slowdown would be an overstatement. We are returning to sustainable robust advertising expenditure growth in line with the prospects for economic growth."

Chris Griffin may be reached at chris@mediapost.com