• by Jack Loechner , Staff Writer, December 21, 2010

According to ZenithOptimedia's study, "Advertising Expenditure Forecasts," global ad spending will increase 4.9% this year and grow at an annual rate between 4.6% and 5.2% over the next three years. In the U.S., ad spending will increase by 2.2% this year, and will be up by a projected 2.4% next year. Ad growth will be led by Internet advertising, which is projected to increase 12.5% next year and up an average of 10.6% a year through 2016, according to the report.

Most of the large financial, retail and automotive spenders have returned to the marketplace, notes the report, but the economy has still not returned to its pre-recession level, and neither has advertising spending.

In the U.S., the media categories seeing the highest ad spending growth this year include:

•  Internet driven by online video and social media. (13.5%)
• Television driven by technology (7.4%)
• Outdoor, also technology driven (3.0%)

Categories with the largest declines this year are:

• Newspapers (down 10.0%)
• B2B magazines (down 6.0%)
• Radio (down 2.6%)

Advertising Expenditure By Medium (US$ million, current prices; Currency conversion at 2009 average rates)
	2009	2010	2011	2012	2013
Newspapers	$97,237	94,199	93,019	92,300	91,908
Magazines	43,844	43,184	42,644	42,372	42,300
Television	165,260	180,280	191,198	202,380	213,878
Radio	31,855	31,979	32,580	33,815	35,054
Cinema	2,104	2,258	2,393	2,538	2,681
Outdoor	28,120	29,319	30,945	32,821	34,554
Internet	54,209	61,884	70,518	80,672	91,516
Total	422,629	443,102	463,297	486,898	511,890
Source: ZenithOptimedia, December 2010

The report expects the recovery in ad expenditure to continue at a steady pace over the next three years, with 4.6% growth in 2011 and 5.2% growth in both 2012 and 2013. There are certainly risks to the recovery, notably high debt in the developed world (both private and public), persistent unemployment in the US, fears of defaults in the Eurozone, and cuts in government spending. Until advertisers are fully confident that the economic recovery will be sustained, the report anticipates growth to remain below its long-term trend rate of 6%.

Advertising Expenditure By Region (Major Media: newspapers, magazines, television, radio, cinema, outdoor, internet; US$ million, current prices)
Geography	2009	2010	2011	2012	2013
North America	156,556	160,386	164,516	169,277	175,024
Western Europe	100,143	104,225	107,520	111,300	114,712
Asia Pacific	99,746	106,021	113,345	122,000	130,711
Central & Eastern Europe	25,402	27,095	29,243	32,284	35,514
Latin America	25,711	29,315	31,673	34,082	36,836
Africa/M. East/ROW	21,220	22,654	24,150	25,941	28,044
World	428,778	449,696	470,447	494,883	520,840
Source: ZenithOptimedia, December 2010

In recent years there has been a big difference between the growth rates of developed and developing markets, and we expect this to continue, caused by the much stronger economic growth of the developing markets.

The world's current top ten ad markets divide into four broad groups. Japan is forecast to grow only 5% between 2010 and 2013, dragged down by deflation and huge public debt. The US and the big markets in Western Europe (France, Germany, Italy and the UK) are forecast to grow a disappointing 7% to 9% over the period, held back by concerns over debt, unemployment and government spending. Australia and Canada did well during the downturn, thanks partly to strong trade links with Asia Pacific, and will grow a much more substantial 15% to 17%. The ‘emerging' markets of Brazil and China will grow 31% and 51% respectively.

Its rapid growth means China will overtake Germany to become the world's third-largest ad market in 2011, and stay at that position throughout the forecast period. China is currently just over half (52%) the size of Japan, the second-largest ad market, and will be three-quarters (76%) of its size in 2013. Russia will enter the top ten in 2012, leapfrogging Australia and Canada to take ninth place, and then overtake Italy to take eighth in 2013.

Top Ten Ad Markets (US$ million, current prices; Currency conversion at 2009 average rates)
2010 Rank		Adspend	2013 Rank		Adspend
1	USA	$151,519	1	USA	$164,844
2	Japan	43,267	2	Japan	45,300
3	Germany	24,631	3	China	34,236
4	China	22,606	4	Germany	26,508
5	UK	18,047	5	UK	19,678
6	Brazil	14,243	6	Brazil	18,662
7	France	12,875	7	France	13,825
8	Italy	10,753	8	Russia	12,228
9	Australia	9,394	9	Italy	11,734
10	Canada	8,867	10	Australia	10,981
Source: ZenithOptimedia, December 2010

  

The Ten Largest Contributors To Global Adspend Growth (2013 v 2010; US$ million, current prices; Currency conversion at 2009 average rates)
2010 Rank		Adspend growth
1	USA	$13,325
2	China	11,630
3	Russia	4,431
4	Brazil	4,419
5	Indonesia	2,652
6	India	2,493
7	Japan	2,033
8	Germany	1,877
9	UK	1,631
10	Australia	1,587
Source: ZenithOptimedia, December 2010

Looking at their growth between 2010 and 2013, the media can be divided into four groups, says the report:

• Newspapers and magazines are forecast to decline by 2% between 2010 and 2013 as circulations continue to fall and readers migrate to the internet. Radio is forecast to grow by 10% - behind the market as a whole, which will grow by 16%.
• Outdoor will outperform the markets with 18% growth, television and cinema with 19% each. These three media have benefited from technological improvements that have encouraged more consumption (such as HDTV and 3D movies) and increased their visibility and impact (such as digital outdoor displays). Meanwhile
• The internet is still rapidly increasing its market share, which will rise from 14.0% this year to 17.9% in 2013. Display advertising's share of internet ad expenditure fell from 36.2% in 2006 to 33.6% in 2009, but the rise of internet video and social
•  media have reversed that trend. The report forecasts display to take 33.9% of internet adspend this year, and 35.0% in 2013.

Internet Advertising By Type (US$ million, current prices Currency conversion at 2009 average rates)
	2009	2010	2011	2012	2013
Display	$18,221	20,996	24,159	27,866	32,073
Classified	9,770	10,352	11,267	12,285	13,285
Paid search	26,219	30,535	35,092	40,520	46,158
Total	54,209	61,884	70,518	80,672	91,516
Source: ZenithOptimedia, December 2010

Television has been the stand-out success of the last five years among traditional media. Bigger and higher-quality displays, more channels delivered by digital television, and the convenience of PVRs mean people are watching more television than ever. Television's share of the ad market has increased from 37.1% in 2005 to 40.7% in 2010, and will rise to 41.8% in 2013.

Share Of Total Adspend By Medium (%)
	2009	2010	2011	2012	2013
Newspapers	23.0%	21.3	20.1	19.0	18.0
Magazines	10.4	9.7	9.2	8.7	8.3
Television	39.1	40.7	41.3	41.6	41.8
Radio	7.5	7.2	7.0	6.9	6.8
Cinema	0.5	0.5	0.5	0.5	0.5
Outdoor	6.7	6.6	6.7	6.7	6.8
Internet	12.8	14.0	15.2	16.6	17.9
Source: ZenithOptimedia, December 2010

The importance of the internet to advertisers is understated by these figures, because as well as creating new opportunities in paid media, it has greatly expanded brands' abilities to talk to consumers via social media, both ‘owned' (on brands' own websites and microsites, YouTube channels, Twitter and Facebook accounts and so on) and ‘earned' (conversations consumers have on forums, blogs, etc). These activities can be extremely effective, and many advertisers have embraced them enthusiastically, but most of them will never be picked up in a survey of ad expenditure, says the report.

Internet Advertising By Type (US$ million, current prices Currency conversion at 2009 average rates)
	2009	2010	2011	2012	2013
Display	18,221	20,996	24,159	27,866	32,073
Classified	9,770	10,352	11,267	12,285	13,285
Paid search	26,219	30,535	35,092	40,520	46,158
Total	54,209	61,884	70,518	80,672	91,516
Source: ZenithOptimedia, December 2010

For more information about this study and access to the PDF format file, please go here.