The Hindu Business Line : Ad spend projected to grow at 6.6% globally in 2008

Chennai, July 4 Growth in ad spends in the developing markets was outpacing growth in the Western markets and the developing markets would contribute more than half of the ad expenditure growth in the years to come.

ZenithOptimedia forecasts that the world ad spend would grow by 6.6 per cent in 2008 — up slightly from the 6.5 per cent it had predicted in its March forecast. This growth would represent a step-up in ad spends globally, up from 5.2 per cent growth recorded for the past 10 years.

For 2008, the growth forecast for North America has been downgraded from 3.7 to 3.5 per cent and for Western Europe from 3.9 per cent to 3.7 per cent. Forecasts for the rest of the world have been revised up to 11.8 per cent from 11.1 per cent.

According to the study, the developing markets were expected to contribute 62 per cent of ad expenditure growth between 2007 and 2010 and would increase their share of the global ad market from 27 to 33 per cent.

Further, Internet advertising had received a boost thanks to the economic uncertainty in the developed markets, which has accelerated a shift of budgets to accountable Internet advertising. According to ZenithOptimedia, Internet advertising is now expected to break the 10 per cent share barrier this year, and account for 13.6 per cent of the world ad spend by 2010.

Ad budgets move online

According to the study, Western advertisers, faced with an uncertain economic future, were shifting more of their budgets online where the returns on their investment are obvious, and easy to quantify and fine tune. Internet ads were cheap, easy to target and to customise for particular audiences.

The quantity and quality of online video was improving, and online audiences for full-length films and television programmes – and the ads that surround them – were growing rapidly. Paid search continued to attract new advertisers, particularly small companies that may previously have advertised only in directories, if at all, it adds.

Newspapers losing share of ad pie

Newspapers, magazines, television and radio were all losing share to the internet, but newspapers were suffering the most. This was because news Web sites offered more timely coverage and instant reaction. Besides, classified advertising worked better online than offline. Newspapers’ share of the global ad market fell by 7.6 percentage points in the 10 years to 2007, and was expected to fall another 3.5 points by 2010, it said.

Further, though a 4 per cent growth in nominal newspaper ad expenditure was forecast between 2007 and 2010, this would equate to a 6 per cent drop after adjusting for expected inflation.

Outdoor was the other medium that was gaining market share. As well as investing in traditional displays, contractors were installing digital billboards that could display eye-catching creative, change at short notice and interact with consumers (for example by sending messages to their mobile phone by Bluetooth, or by using motion sensors to react to their movements), all of which made outdoor more attractive to advertisers. It expected outdoor to increase its share of the global ad market from 6.2 per cent in 2007 to 6.7 per cent in 2010.

Credit crunch

According to the research outfit, the credit crunch in the Western markets had worried investors, consumers and advertisers, leading them to revise downwards the ad expenditure growth in North America and Western Europe. Further, after adjusting for inflation thanks to high energy and commodity prices, the real growth in these markets is unlikely to exceed 1 per cent, it says.

However, forecasts for both regions in 2009 and 2010 have been upgraded on the back of stronger-than-expected growth in Internet advertising in these regions.

On the other hand, ad expenditure outside North America and Western Europe was expected to grow 11.8 per cent over the course of this year, 0.7 percentage points more than that forecasted in end-March. Export-led expansion and domestic consumption had provided advertisers fertile ground to establish and expand their brands in these economies.

Related Stories:
Print advertising of summer cool products down 25%
Print advertising of ACs up 11%
Print advertising grows 5% in Q1