• by Joe Mandese  @mp_joemandese, December 5, 2005

In the first of a series of revised ad spending outlooks scheduled to be unveiled today, ZenithOptimedia Group significantly lowered its projections for both U.S. and worldwide ad spending from its last revision just a little over a month ago. The Publicis media buying unit now predicts U.S. ad spending will rise only 2.9 percent in 2006, vs. a gain of 3.6 percent when it released its last quarterly update on Oct. 24. Worldwide ad spending is now projected to grow 4.8 percent, down from a forecast of 5.2 percent.

While the agency said the new revision is "exactly in line" with long-term ad growth tends in the world economy, it said 2005's relatively moderate growth is due to tough comparisons with the quadrennial effects of 2004, which had the summer Olympics, European soccer tournaments, and the U.S. Presidential election. Conversely, the agency said 2006 would look stronger by comparison, and would be stimulated by incremental spending by U.S. elections, the Winter Olympics, and the World Cup soccer tournament. In an effort to understand underlying growth trends, ad monitoring firm TNS Media Intelligence this week is expected to release a new report that includes a method for factoring out the vagaries of incremental advertising effects such as Olympic ad spending.

Meanwhile, ZenithOptimedia also revised its 2006 outlook down from a previous forecast. U.S. ad spending is now projected to rise 5.1 percent vs. the previous prediction of 5.7 percent, while worldwide ad spending is set to gain 5.9 percent vs. the 6.2 percent the agency projected in October.

ZenithOptimedia did not provide details in its early morning release as to the reasons behind its sudden downward revision, but it comes the same morning that other high-profile ad forecasters, including Universal McCann's Bob Coen, are set to reveal their latest outlooks during the opening day of UBS' annual Media Week conference in New York.

One medium ZenithOptimedia sees as an increasing factor fueling the worldwide advertising marketplace is the Internet. The agency increased its advertising share estimates for online ad spending once again, estimating that the Internet accounted for 4.6 percent of ad spending in 2005--up from its earlier share estimate of 4.3 percent. By 2008, ZenithOptimedia predicts the Internet will account for 6.4 percent of global ad spending.

"From 2005 to 2008 inclusive we predict it will create $15.8 billion new ad dollars--17 percent of total global ad growth over this four-year period," said the agency, emphasizing: "This may be conservative: we often revise Internet revenues upwards."