• by Joe Mandese  @mp_joemandese, April 10, 2006

ZenithOptimedia Group this morning revised its global ad spending outlook, and predicted a new world order increasingly dominated by the Internet. The agency predicts that the Internet will overtake worldwide outdoor advertising spending next year, and will "catch up" with radio in 2008, firmly establishing it as one of the major ad-supported media.

"We have revised our Internet forecasts upwards once again as it has continued to exceed expectations," the agency's new forecast says. "We now predict it will attract 6.5 percent of all advertising in 2008--up from 4.5 percent in 2005."

That's a major correction from ZenithOptimedia's last forecast, issued in December 2005, which projected the Internet would account for only 6.0 percent of global advertising budgets in 2008.

However, the agency justified its revision, noting: "The internet is now firmly established as a mainstream advertising medium in developed markets, and in many developing markets too.

In fact, the Internet is now the fastest-growing major medium, according to the agency--rising faster than outdoor, which also is undergoing a global advertising boom.

Like other forecasters, ZenithOptimedia has revised its 2006 outlook up slightly, calling for a 6.0 percent increase in global ad spending--up from 5.9 percent in its December 2005 forecast.

U.S. ad spending is now projected to grow 5.2 percent this year, versus 5.1 percent in December.

ZenithOptimedia, however, revised its outlook for U.S. and worldwide ad spending down for 2007 and 2008. The U.S. is now projected to grow 4.2 percent in 2007 and only 4.0 percent in 2008, versus previous forecasts of 4.4 percent and 4.9 percent, respectively. Global ad spending is now projected to rise 5.6 percent in 2007 and 5.3 percent in 2008, versus previous forecasts of 5.7 percent and 6.0 percent, respectively.

Despite lowering its long-term outlook, ZenithOptimedia noted that advertising expenditures would grow faster than the world's economy each year to 2008.

"Advertising accounted for 0.96 percent of world [gross domestic product] in 2005, and we expect this to rise to 0.99 percent by 2008," the agency said, noting: "This would be its first period of consistent out-performance since the late 1990s, and suggests that the advertising cycle has at last emerged from the trough it entered in 2001. Advertising will remain well below the peak of 1.08 percent of GDP it reached in 2000, though, suggesting there is plenty of room for further growth."