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Global Ad Growth on the Rise

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The advertising recovery has continued to surprise on the upside, prompting ZenithOptimedia to upgrade its forecast for global ad growth this year from 3.5% after a mid-year surge pushes global ad markets......

Global Ad Growth on the Rise
The advertising recovery has continued to surprise on the upside, prompting ZenithOptimedia to upgrade its forecast for global ad growth this year from 3.5% after a mid-year surge pushes global ad markets to 4.8% growth this year. This is the fourth upgrade in a row, after six consecutive downgrades. Moderate increases also forecast for 2011. ZenithOptimedia forecast that 2012 will be the strongest year of the upturn so far, with 5.4% growth, and growth rates of 6%+ are in prospect once advertisers regain confidence in the economy.
All regions have grown faster than expected this year. Zenith have given minor upgrades to Asia Pacific, Central & Eastern Europe and Africa/Middle East/Rest of World (of between 0.2 and 0.5 percentage points), all of which have been growing healthily for some time now. North America is up from 1.3% to 2.4%, and Western Europe is up from 2.2% to 3.0%. The most dramatic revision is in Latin America, where they now expect 16.8% growth this year, up from 7.0%, after an explosion of growth in Brazil. 
Although the forecast for global growth in 2011 has increased from 4.5% to 4.6%, this now represents a minor slowdown after the surprisingly strong growth of 2010. Advertisers in the developed markets remain cautious about the future, and will not commit to ambitious expansion plans while unemployment and debt remain so high, and government spending cuts threaten the recovery in demand. They now forecast 2.4% growth in North America, up from the 1.3% growth forecast three months ago. Most of the large financial, retail and automotive spenders have returned to the market in the US. Political advertising spend on local television is 61% higher than in 2008, and – alongside public relations spend by BP – is pushing sales by television stations in Florida, Texas and Louisiana to record levels. Magazine readership is up, and publishers have invested heavily in new titles – 68 new magazines launched in July, for example. Zenith have doubled their forecasts for US growth this year from 1.1% to 2.2%, while Canada is up from 5.4% to 6.5%.
Summer is traditionally a quiet season for advertising in Western Europe, but this summer was a strong one, partly thanks to the World Cup football in a favourable time zone for European viewers. The best-performing markets were France (where growth of 4.0% is now expected in 2010), the UK (4.5% growth in 2010), Finland (4.9%), Norway (6.0%), Sweden (6.6%) and Belgium (7.4%). Growth of 3.0% for Western Europe is expected in 2010, and the same in 2011.
The forecast for Japan is to shrink by 0.3% this year, an improvement on the 0.7% decline we forecast in July, after a strong GDP report in September. The only other market that is shrinking in Asia Pacific is New Zealand, which we expect to shrink 0.4%. The rest of the region is growing healthily and in eight markets (China, India, Indonesia, Malaysia, Pakistan, the Philippines, Thailand and Vietnam) growth is in double digits. Over the next few years Zenith expect slow improvement in Japan, together with continued strong growth from the rest of the region, generating 6.3% growth for Asia Pacific in 2010, followed by 6.4% in 2011 and 7.4% in 2012.
A few of the smaller markets in Latin America are facing a year of slow growth in 2010: we forecast Chile, Costa Rica, Puerto Rico and Uruguay to grow by 1%-2% each. But most markets have fully recovered and are enjoying a year of healthy expansion, particularly – as mentioned earlier – Brazil, which is forecast to grow 26%. Also expected is 12%-16% growth from Argentina, Mexico, Panama, Peru and Venezuela, and 17% growth for the region as a whole, slowing to a more sustainable 9% in 2011 and 2012.
Central & Eastern Europe suffered more from the downturn than any other region, losing 24.6% of ad expenditure in 2009. The region is now split between those markets that quickly recovered and are now making up lost ground (notably Belarus, Bosnia and Herzegovina, Russia, Serbia, Slovenia, Turkey and Ukraine, which is forecast to grow by between 10% and 30% this year), and those where entrenched economic problems are still dragging down ad expenditure (Bulgaria, Estonia, Greece, Hungary, Latvia and Romania, which are expected to shrink by between 4% and 17%). Zenith predict that Greece – suffering from debt crisis and austerity – faces the most prolonged decline, with a 17% drop in ad expenditure in 2010 followed by a 5% drop in 2011. Latvia is not far behind, with 14% decline forecast for 2010 and 4% decline forecast in 2011. They expect all other markets to return to growth in 2011, however, and forecast steady improvement in ad expenditure for Central & Eastern, from 7.2% growth in 2010 to 9.9% in 2011 and 11.0% in 2012.
Television and the internet did well in the downturn and will continue to win market share during the recovery.   Zenith predict television’s share to rise from 39.2% in 2009 to 41.6% in 2012, and the internet’s share to rise from 12.8% to 16.5% over the same period.
Source: ZenithOptimedia Group Limited
The full report is available to purchase at and includes charts by region and media.
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