Big 3 Forecasters See Ad Economy Expanding In 2011

Two of Madison Avenue's Big 3 forecasters -- Interpublic's Magna and WPP's GroupM units -- have significantly upgraded their forecasts for the worldwide ad economy in 2011. The other, Publicis' ZenithOptimedia unit, revised its forecast slightly downward. The forecasts were released late Sunday in anticipation of presentations that will be made Monday morning at the opening of the UBS annual Media Week conference in New York.

Interpublic, which over the past couple of years has shifted its method for estimating the ad economy based on media company revenues, now expects the global ad economy to expand 5.4% -- an increase of nearly a percentage point over its previous projection of 4.2% global advertising growth in 2011.

GroupM now projects the global ad economy will expand 5.8% in 2011, up 1.3 points from the 4.5% expansion it was projecting for 2011 in its summer 2010 forecast.

ZenithOptimedia now expects the global ad economy to expand 4.6%, 0.2 points less than the 4.8% it projected in its last public forecast.



Each agency utilizes slightly different methods for calculating the advertising economy. With the exception of Interpublic's Magna, most other agencies still utilize advertiser spending vs. media company revenues. Moreover, GroupM said its forecast is based on an aggregation of estimates for 70 countries, while Magna said its forecast is based on more than 60 countries. ZenithOptimedia did not disclose how many countries are factored into its global estimates.

All of the forecasts generally reflect part of a longer-term, ongoing improvement in advertising expectations, and cite improvements in the macroeconomies of the world, as well as spending by marketers.

"We forecast that media suppliers around the world will grow their advertising revenues during 2011 by +5.4% to total T412 billion on a constant currency basis, above our previously published expectations of +4.2%," Magna's Brian Wieser wrote in a revised outlook released on Sunday. "This follows 2010's recovery-year growth rate of +6.9%, also above prior expectations for growth of +5.6%. The ad-supported media economy is firmly on a path towards sustained gains in most countries around the world."

"The key result of this update is the continued rise of developing markets and digital media, and their central role in driving global growth," Steve King, ZenithOptimedia's worldwide CEO, said as part of that agency's release. "In fact the importance of the internet is underrepresented in these figures. Advertisers are investing a lot more in owned and earned media, where their activities do not count as ad expenditure in the traditional sense."

All of the forecasters see digital media, including online and fast-growing sectors such as online video and social media, as playing a major role in driving the overall advertising economy.

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