Despite the global economic recession's drag on advertising budgets, the growth in online ad spending appears to be defying expectations, and is expanding at double-digit rates, according to the
latest quarterly forecast from Publicis' ZenithOptimedia Group. The agency estimates that Internet ad spending will expand 10.1% in 2009, an increase of more than 1.5 percentage points over its last
forecast in April.
"Its familiar virtues of transparency, accountability and flexibility have proved even more attractive in a recession than ever," the Publicis shop writes in the
new report, released early Monday morning.
Based on current trends, the agency projects Internet ad spending will rise to $56.8 billion this year, or 12.6% of the global advertising economy.
That means the Internet will pick up more than two points of worldwide advertising share, this year, and its momentum is only expected to accelerate.
"By 2011 we expect it to account for 15.1%
of all ad expenditures, up from 10.5% in 2008," the report predicts. "Most of this growth will come from paid search, which is an ideal method of reaching consumers looking for bargains. In the U.S.,
we predict search advertising to grow 20.0% in 2009, while traditional display grows 3.0% and classified grows just 1.8%."
ZenithOptimedia attributed some of the surge in the U.S. search
advertising marketplace to the launch of Microsoft's new Bing search engine, which is creating "welcome competition to Google and should spur further innovation in search."
The gain's in the
Internet's share of global ad spending appears to be coming at the expense of every other major medium. ZenithOptimedia predicts spending in all other media will decline this year.
Overall ad
spending is now expected to decline 8.5% this year, down from ZenithOptimedia's April forecast of a 6.9% drop.
ZenithOptimedia said the first quarter "came in below our expectations," and
that, "faced with extreme uncertainty, advertisers in most sectors planned for the worst and cut their costs in anticipation of steep drops in revenue. In uncertain times advertising is often treated
as a discretionary expense and cut early, despite much research that shows companies maintaining their ad expenditure in a recession come out of it stronger than those that do not."
Among the
other major media, ZenithOptimedia forecasts TV, cinema and outdoor will decline by less than the market as a whole, shrinking by 7.1%, 4.8% and 7.0% respectively.
"Some advertisers,
particularly in the fast-moving consumer goods sector, are taking advantage of cheap television and increasing their volumes, targeting higher market share. Cinema often does relatively well in a
recession, providing consumers with escapist entertainment. Digital billboards and other non-traditional forms of outdoor are attracting budgets from other media by offering new types of eye-catching
display."
Newspapers, meanwhile, peaked in 2007 at $131 billion worldwide, and has fallen ever since.
"We predict newspaper ad expenditure to shrink 14.7% in 2009 and to continue
shrinking for the rest of our forecast period. In 2011 we forecast newspaper ad expenditure will total US$101 billion, 22.7% below its 2007 peak," the agency said, predicting a similar scenario for
the other major print medium, magazines.
"Magazines face an even tougher time this year as luxury advertisers cut back severely: we forecast a 16.7% decline in magazine advertising in 2009.
But their long-term prospects are brighter than those of newspapers, since the experience of reading a magazine is less easy to replicate on the internet. We predict that magazine advertising will
return to 1.5% growth in 2011, reaching US$46 billion, 22.4% below its own 2007 peak.