Global Ad Spending to Fall 0.2% in 2009

December 8, 2008

This article is included in these additional categories:

Agency Business | Asia-Pacific | Automotive | Europe & Middle East | Financial Services | Retail & E-Commerce

Advertising spending in measured media around the world is forecast to drop 0.2% to $458 billion in 2009, compared with 2008, when spending is expected to rise 2.6%, according to a new study from WPP‘s GroupM.

The projected decline is the first such decrease in global advertising since the 3% fall in 2001 after 2000’s extraordinary, dot-com-driven ad growth of 15%, Group M said.

The report, “This Year, Next Year,” contains forecast figures for nearly 50 nations, and predicts that ad spending in the US will fall three percent to $157 billion in 2009 following a 0.3 percent increase to $162 billion in 2008. Spending in Western Europe is expected to fall to $113 billion, after seeing negative (-0.7%) growth in 2008.

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Highlights of the study were presented at the UBS Media Conference in New York by GroupM Futures Director Adam Smith, who oversees all of GroupM’s “This Year, Next Year” reports.

In his presentation, Smith identified internet ad spending as the only significant growth area, but noted that despite a projected 5% increase in 2009, spending is still down compared with an expected 16% growth this year.

Smith added that the world’s other leading internet economy, the UK, mirrored US projections with rates of four percent in 2009 compared with 22% in 2008. Worldwide, internet ad growth is predicted to slow from 22% in 2008 to 10% in 2009, representing $5 billion growth to reach $59 billion, or 13% of measured media investment.

“Advertisers are scrutinizing every penny,” said Smith. “The automotive and financial services categories have obviously seen weakness across 2008, and retail will be under pressure as we move beyond its busiest fourth-quarter into 2009. Among our own client base we are not seeing wholesale cancellations, but we are seeing migration from expensive and less-tried-and-true media to value and certainty.

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

For example, Smith pointed out that gasoline prices have recently dropped more than $2 per gallon, resulting in significant savings for consumers. Also, he said prices for raw materials prices have fallen, thereby freeing up funds for other purposes such as marketing.

“Brands which were strong enough to raise prices when commodities spiked are even better-placed,” Smith said. “Most of all, the strategy-minded advertiser knows recessions are a rare and brief opportunity to build share at bargain prices.”

About the study: The “This Year, Next Year” report is part of GroupM’s media and marketing forecasting series drawn from data supplied by holding company WPP’s worldwide communications resources.

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