The Hindu Business Line : Adspend forecast trimmed to 4.3 %

Mumbai, Oct. 14 Media buying agency ZenithOptimedia, a unit of Publicis Groupe, has reduced its forecast for adspend growth to 4.3 per cent in 2008, down from the 6.6 per cent growth forecast that it had published in June earlier.

Financial shock

It has also reduced its growth forecast for 2009 from 6 per cent to 4 per cent. The reason for the downgrade is primarily the financial shock caused by the bank failures during the latest phase of the crisis in the financial markets, which has spread uncertainty and undermined confidence in the wider economy.

The bank failures will have a fairly small direct effect on ad expenditure — since financial advertising contributes only about 4 per cent of global ad expenditure — but fears for the future will cause consumers to cut their spending, while companies carefully inspect their budgets to find cost savings.

Unlike in the periods leading up to the last two ad downturns, advertisers have not been increasing their budgets ahead of economic growth over the last few years. In recent years, however, ad expenditure has roughly tracked the economy, and has remained at 0.92 per cent-0.93 per cent of GDP. There is no bubble in ad expenditure to burst, which is why ZenithOptimedia expects global ad expenditure to slow in 2008 and 2009.

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