• by Joe Mandese  @mp_joemandese, July 18, 2005

A leading global agency media network Monday revised its U.S. and global ad outlooks, one again lowering overall ad spending expectations for 2005, but dramatically increasing estimates for online ad spending in the U.S. and worldwide. While it said demand for traditional media generally remains "firm," ZenithOptimedia Group said the real momentum is coming from the Internet, which it now estimates will account for $16.4 billion in worldwide ad spending during 2005. That would represent 4.1 percent of ZenithOptimedia's current 60-country global forecast for 2005, an increase from the 3.8 percent share it was predicting online would take in its last forecast.

Much of that revision is coming from the U.S., where ZenithOptimedia added $1.2 billion to its online forecast, noting, "This upgrade is sustained in 2006 and 2007. We have tended to underestimate Internet advertising."

Nonetheless, the ZenithOptimedia report notes that online is not the only medium "substituting" for traditional media, citing gains in its outdoor media spending forecast and pointing out that the very definition of media has expanded. "In media planning, we identify up to 35 types of customer contact," the agency said.

The rise of the Internet and the expansion of alternative media options appears to be coming at the expense of the world's most dominant medium: television. ZenithOptimedia revised its 60-market TV ad spending forecast downward to 37.3 percent share of worldwide ad spending in 2004 from an earlier estimate of 37.7 percent, and has shaved half a point off its 2006 and four-tenths of a point off its 2007 market share estimates for TV.

"TV's share of total world advertising spend appears to be peaking at 38%," notes the agency. "Our new forecast reduces TV's 2005 [worldwide advertising] spend by $2.3 billion to $148.2 billion. The bulk of this downgrade occurs in the USA ($1 billion, where several big advertisers are reducing and redeploying TV budgets) and Japan (also $1 billion, a function of brittle consumer confidence and ad migration to the Internet)."