ZenithOptimedia increases global ad spend forecast

This upgrade is the third in a row, after six consecutive downgrades.

Jonathan Barnard, head of publications at ZenithOptimedia, said: "We are not looking at a double dip in the ad market.

"While the recovery is gathering pace, we are certainly keeping a close eye on things and there are certain economic factors that would risk dragging the market back down again or reducing the rate of growth."

 

The agency has upgraded most of its forecasts for Western Europe, despite concerns over Eurozone debt, after advertisers demonstrated willingness to spend in the first half of the year. It now predicts 2.2 per cent growth in 2010, up from 0.4 per cent.

Western European spend will increase during 2010 to US$102,090 million from $99,919 million during 2009. This is expected to increase to $108,259 million.

North America is the region that has been upgraded the most in the survey, up by 2.8 percentage points. In comparison, ZenithOptimedia in its last forecast said it expected the region to shrink 1.5 per cent during 2010, but now the forecast is for1.3 per cent growth.

This is because consumer confidence and spending has recovered quite strongly in the US, despite persistent unemployment.

Over the next few years ZenithOptimedia said it expected slow improvement in Japan together with continued impressive growth from the rest of the region, generating 5.8 per cent growth for the region as a whole in 2010, followed by 6.5 per cent in 2011 and 7.5 per cent in 2012.

Overall the agency network is forecasting 1.3 per cent growth from developed markets (North America, Western Europe and Japan) in 2010, compared to 8.6 per cent growth from the rest of the world.

 

In 2011 the gap between developed and developing markets will narrow slightly, but growth in developed markets will remain modest.

ZenithOptimedia said it forecasts developed markets to grow by 2.4 per cent in 2011 and 2.9 per cent in 2012, while developing markets will grow by 9.1 per cent and 9.8 per cent respectively.

The agency expects developing markets to drive most of the growth in global ad expenditure over the next few years, contributing $39 billion of the extra $60 billion the agency expects to see added to the world ad market between 2009 and 2012.

Central and Eastern Europe suffered more from the downturn than any other region, losing 24.6 per cent of ad expenditure in 2009.

 

Barnard said that although figures suggested that the advertising industry was unlikely to experience a 'double dip' that the industry had to look out for two things, possible financial problems in southern Europe and lack of consumer confidence due to fears over unemployment.

"Over the last couple of months, one of our main worries has been the public debt in European economies; in particular we are looking at countries in southern Europe and whether the public debt can actually be financed.

Bernard added: "Persistent unemployment is also a problem, even though we are looking at economic recovery in terms of GDP (gross domestic product), which is positive, if not huge, we're not really seeing large reductions in unemployment numbers.

"For consumer confidence to truly recover, we really need to reduction in unemployment and new jobs created and people feeling that they're secure in their current jobs."