• by Joe Mandese  @mp_joemandese, December 8, 2008

The global advertising economy will recede in 2009 for the first time since the industry's last recession in 2001, two of Madison Avenue's leading forecasters predicted in reports released early this morning. Both WPP's GroupM and Publicis' ZenithOptimedia Group predicted the global ad marketplace will decline 0.2% during 2009, but differed on the degree to which the U.S. advertising economy - still nearly half of all global ad spending - would decline.

GroupM predicted U.S. ad spending would drop 3.2%, while ZenithOptimedia sees nearly twice that degree of erosion, calling for a 6.2% drop in the U.S. ad marketplace in 2009.

The forecasts, which were released on the eve of this morning's annual UBS "Media Week" conference in New York, at which Madison Avenue's leading forecasters update their outlooks, are the most dire portrait yet of the global ad economy.

"It is now clear that the ad market is in the middle of a sharp downturn that began in third quarter 2008 and accelerated in the fourth quarter," ZenithOptimedia write in its new report, which will be presented by CEO Steven King later this morning at the UBS conference, alongside GroupM's Adam Smith and Interpublic's Bob Coen.

ZenithOptimedia said it reduced its estimate for the rate of global ad spending growth in 2009 from a previous prediction of 4.0% to -0.2% as, "the fallout from the financial crisis has spread throughout the real economies of the developed world.

"Consumer and corporate confidence has been severely shaken, and the economic outlook is uncertain. The best-informed economic experts are arguing about exactly what has gone wrong, how bad it will get and what should be done about it. Because of the general economic volatility there is greater degree of uncertainty than usual to our forecasts, and we are keeping them under monthly rather than quarterly review."

The GroupM report was equally pessimistic for the industry's outlook in 2009.

"We do not expect an ad collapse in 2009, but nor do we expect the sudden improvement of the last two cycles," stated GroupM's Smith. "Consumer retrenchment is simply too deep. However, the good news is that some support for recovery is already in place."

The one bright spot in both agencies forecasts continues to be the Internet. In stark contrast to the industry's last recession in 2001, which was precipitated by a collapse in the online advertising marketplace, the Internet will actually help sustain the global ad marketplace in 2009, and will increase its share of global and U.S. ad spending as a result (see related story in today's Online Media Daily).

While online ad spending growth will have its slowest year of growth yet since it climbed out of the last ad recession, it will still grow at rates that would seem healthy for the other major media. GroupM unit projects online ad spending will expand 10% in 2009, a marked dip from its 22% rate of growth in 2008, but still a double-digit rate of expansion amid a global economic ad recession. ZenithOptimedia Group predicts it will fare even better, expanding 18% in 2009.

 

ZenithOptimedia, GroupM Forecast U.S., Worldwide Ad Recession In 2009
	2008	2009	2010	2011
ZenithOptimedia
U.S.	-3.8%	-6.2%	+2.1%	+2.8%
Worldwide	+1.3%	-0.2%	+5.5%	+5.8%
GroupM
U.S.	+0.3%	-3.2%	NA	NA
Worldwide	+2.6%	-0.2%	NA	NA