Agency Forecasters Flex Their Quads, Say Effects Will Sustain 2012 Ad Growth

With a full recovery from the last recession still more than a year away, the quadrennial year 2012, with its incremental political and summer Olympics and European Football Championship advertising dollars, will provide the overall ad economy with a much-needed shot in the arm.

In its latest forecast, released Monday, Publicis Groupe’s Zenith Optimedia is predicting global ad spending growth next year of 4.7% to nearly $486 billion -- more than a full percentage point higher than the 3.5% growth the agency now says to expect for full-year 2011, which would bring this year’s worldwide total to $464.3 billion.

In the U.S., growth next year will be short of the global pace -- up 3.5% to $160.3 billion, per the ZO forecast. But year-to-year growth in the U.S. will be up, as the agency is standing by its October call that 2011 will be up 2.2% to nearly $155 billion. 

Separately, WPP’s GroupM predicts that the quadrennial effect will provide a somewhat higher boost to global ad spend growth, which it predicts will climb 6.4% reaching $522 billion. Much like ZO, GroupM says growth next year will be higher than 2011, which will close out with a 5% spending gain to $490 billion. 



In the U.S., GroupM predicts that spending next year will grow 4% to $153 billion, which would be slightly higher than the 3.3% growth expected for full-year 2011, when the total is expected to reach $147 billion. Both ZO and GroupM are presenting their ad spending forecasts in detail at the UBS Media and Communications Conference in New York on Monday.

Spending next year in political, Olympics and the European Football finals will contribute between 1 and 1.5 percentage points of the expected 2012 growth in ad spend, according to the forecaster. But the underlying ad economy is being weighed down by the turmoil in the Euro-Zone, job worries and concerns about consumer confidence in the U.S.

Steve King, global CEO at ZenithOptimedia, notes that the typical quadrennial-year boost in global ad growth is about 7%. Still, King points to recent positive signs in the U.S. -- such as the strong start to the holiday shopping season, with both Black Friday and Cyber Monday showing gains.

That said, King acknowledges that forecasting ad expenditures today is more difficult because of the emergence of so many more media channels and the fact that more markets worldwide are making meaningful contributions to the global ad economy.

Not so long ago, he said, three or four markets made up 70% of total ad spend, including the U.S., which still accounts for about one-third of all expenditures.

“But now you really have to look at the top 30 or 40 markets” to get a good read on full spending picture, he said. And changing dynamics, both in markets and media channels, require forecasters to make revisions more quickly today than in the past. Marketers, he said, are making “greater shifts between media than at any time since the start of commercial television.”

ZO projects that the Internet will continue to grow much more rapidly than any other medium and at an average annual rate of nearly 16% between 2011 and 2014. During that time, it will -- for the first time -- account for more than half (53%) of the growth in total expenditure, said King.

GroupM is also expecting huge growth to continue in the Internet space, providing 43% percent of the global dollar growth in 2012 alone. “We expect digital to comprise 22% of all measured ad investment in mature Western economies in 2012, and 12% in the faster-growing world,” Smith said. “The predicted respective digital growth rates in 2012 are 11% and 37%, so the faster-growing world is catching up fast.” 

The other significant trend that ZO sees is what King calls the “enduring power of television.” Between 2011 and 2014, the medium will grow by nearly $30 billion, or 17%, to almost $216 billion worldwide.

In the U.S., cable will continue to grow at solid low double-digit percentage rates through 2014, ZO predicted. Syndication, however, is headed in the opposite direction, largely as a result of the departure of talk show powerhouse Oprah Winfrey. Just as cable will be up by double digits for the foreseeable future, syndication will decline 12% next year and nearly as much in the following two years, ZO stated in its forecast.

For network TV, ZO predicts that spending will decline 1% next year, despite the Olympics, after a 2% drop in 2011. While those numbers are slightly negative, King’s view is “the networks are holding up quite well in a weak economy. They’re holding on to market share really well.”

That’s particularly true compared to newspapers, a medium that the agency is predicting will see an 8.5% ad spend drop for this year followed by 8% declines in each of the succeeding three years.

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