Ad Forecast Dips to 3.5% For 2012-13

Barclays has lowered its global ad spending forecasts for this year and next, the financial firm confirmed in a report to investors Friday.

The financial firm now believes global spending will reach nearly $490 billion this year, up 3.5%, a downgrade from its January growth forecast of 4%. Next year, the firm believes growth will top out at 4%, a half percentage point lower than it had forecast earlier. Total worldwide spending next year will be close to $500 billion, per the new report.

Barclays cited ongoing issues in Europe and Asia, where China has imposed TV air-time restrictions as factors in the downgrades.

The firm also reported that Internet spending -- growing by leaps and bounds in recent years -- still has significant growth ahead, given that dollars spent on the medium still significantly lag consumers' time spend online.  In the U.S., for example, the firm reported that online usage accounts for about 36% of all media consumption time. The share of advertising spend allocated to online is currently just 16%.



Advertisers will continue to underspend on the medium over the next five years, Barclays predicts, leading it to conclude that “advertising will continue to underperform global GDP for the foreseeable future.”

In April, the firm upgraded its U.S. growth forecast for 2012 to 4.6%, up more than a half percentage point from its January forecast, while spending growth next year was upgraded to 2.3% from 1.6%. For now, those forecasts remain unchanged.

The firm noted that its global forecasts are below the 5.6% average growth estimates for 2012 from other industry forecasters--including ZenithOptimedia, Carat, GroupM and Magna Global. For 2013, its current 4% growth estimate is nearly 1 ½ percentage points lower than the industry average industry forecast of 5.4%.

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