• by Joe Mandese , September 6, 2005

Aegis Group, the world's largest pure-play media services company, Tuesday marginally upgraded its global ad outlook largely on the strength of accelerated ad spending in Asia. While it maintained its U.S. ad growth estimates--4.5 percent in 2005 and 5.0 percent in 2006--Aegis, the parent of Carat and several other media networks, said there are fundamental shifts taking place in advertising demand among the major media, with traditional media flattening or lagging and digital media accelerating.

"We are seeing some interesting shifts in the allocation of advertising budgets," Aegis CEO Robert Lerwill said in the company's revised outlook. Lerwill attributed these changes to Carat's research. "Television's share of advertising spend is leveling out and newspaper's share of advertising is declining, with budgets shifting to the Internet." Noting that online ad spending has already overtaken radio's, Lerwill also said that Aegis also expects it to catch up with outdoor during 2005.

That's an interesting prediction for a media services company that also is betting heavily on outdoor media--creating Posterscope, one of the world's largest media agencies specializing in outdoor media.

Another fundamental shift taking place in worldwide ad spending is the regional deceleration of Western Europe and a corresponding rise in Asia.

Aegis downgraded its European ad growth rate by four-tenths of a percentage point--especially in the U.K., which was decreased by 1.1 percentage points--but upgraded its Asian ad growth rate by a percentage point.

"The Asian advertising market is thriving and, at the current growth rate, it will overtake Europe in spend terms by 2008," the company predicted, adding: "Growth trends in the USA are in line with expectations. In the absence of major political and sport events, it is primarily the underlying performance of the world's economies that is shaping growth."

Carat's Revised Ad Spending Growth Rates

                2004   2005    2006  
Global          6.7%   5.2%    5.8%  
USA             5.8%   4.5%    5.0%   
Asia
Pacific    7.4%   6.8%    7.2%   
Japan           5.4%   2.5%    3.0%  
China          22.0%  18.0%   20.0%   
Europe          5.5%   4.2%    4.8%   
UK              6.8%   3.7%    4.5%

Germany         1.0%   1.0%    2.0%   
France          3.5%   2.0%    2.3%   
Italy           7.9%   2.7%    4.7%   
Spain           6.0%   5.1%    4.6%   
Nordics         5.8%   4.7%
4.0%   
CE Europe      17.5%  11.4%   10.9%   

Source: Aegis Group Plc.