Carat revised downward its growth forecasts for global advertising expenditures in 2008 and 2009, predicting 4.9% growth in 2008 (vs. 6.0% it estimated in March) and a growth of 4.8% in 2009 (vs. a 4.9% estimate in March).
The main driver of the reductions for 2008 is downward revisions for ad spend in four economies: the US, the UK, Spain and China.
Elsewhere, the majority of the developed economies are predicted to contribute less than 5% growth, with the impetus – and double-digit growth – coming from emerging economies in Central and Eastern Europe, Central Asia and Latin America.
“It’s clear that the worldwide economic issues affecting businesses are having an impact on where and how advertisers spend their money,” said Jerry Buhlmann, CEO of Aegis Media.
“Similarly, whilst TV’s share of spend has stabilized, internet advertising is continuing to drive spending ahead of other sectors in nearly every region. Internet is set to overtake radio this year to become the world’s third most popular medium, behind TV and print,” he added.
“With search now central to the planning and execution of any campaign, online media brings a greater level of accountability not just to itself but to TV, print and other forms of advertising. This is why we are predicting further strong growth for internet, even when advertisers are cautious in many of the other sectors,” Buhlmann concluded.
Below, more-detailed projections issued by Carat.
Breakdown by Medium
TV is set to grow this year and next ahead of 2007 performance levels. Similarly, cinema’s growth is strong, but it comes from a very low base. Only newspapers are predicted to decline on a worldwide basis.
Spending on internet advertising continues to grow ahead of all other sectors, albeit not at the same rate as 2007, and Carat predicts that the slowdown in growth will continue through into 2009.
The growth of the internet is primarily at the cost of print advertising spend, even though newspapers and magazines together still dwarf internet’s share; meanwhile, TV is predicted to grow its share year-on-year in both 2008 and 2009:
The trend for growth in developed regions – North America, Japan and Western Europe – remains below the global figure with 2-3% on average forecast for both 2008 and 2009.
The global figure is lifted by the fast growth in emerging economies, most notably Russia (22.8%), India (21.0%) and Mexico (20.0%). Despite the downward revisions since March, China is still one of the fastest-growing markets for advertising with growth of 18.2% predicted for this year.
For 2009, the fastest growth regions are Central and Eastern Europe at 15.2% and Latin America at 14.1%.
US, UK, China and Spain
Growth in the US is predicted to slow to 2.1% from Carat’s earlier forecast of 3.8%, with newspapers, magazines and radio all declining this year – but there will be growth in TV, thanks to the presidential elections and the Olympics, and in the internet.
The UK’s overall forecast has been cut from 4.3% to 2.5%, with a downward revision of 1.8% points.
China’s growth has been revised downward by a percentage point for this year, as the true picture of the impact on 2008 of the May earthquake and what will happen to spending post-Olympics becomes clear. 2009 is forecast to see a more significant decline in growth, with forecasts down from 13.2% to 10.9% in what will become the world’s third-largest advertising market.
However, Spain’s ad spend forecasts have changed the most, down from 3.8% to -2.3% as a result of local macro-economic trends and the severe housing downturn. The majority of spend is coming out of newspapers, magazines and TV, with forecast declines of -6.2%, -4.5% and -3.9% respectively. The internet is predicted to grow by 25% to make up 7.1% of total spend in the country. The Spanish economy is expected to pick up again in late 2009 with -0.8% growth forecast.