ZenithOptimedia Predicts 5.7% Ad-Market Drop - Broadcasting & Cable

ZenithOptimedia Predicts 5.7% Ad-Market Drop

Ad agency revises forecast for North America, expects first global ad-spend drop since 2001
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Ad agency ZenithOptimedia has drastically reduced its projections for 2009 ad spending, predicting a massive 5.7% drop for North America. The agency unveiled its forecast Monday at a UBS media conference in New York, where another ad veteran Bob Cohen is also expected to unveil grim prospects for 2009. 

Underscoring the speed at which the economic picture is changing, the agency revised its 2009 forecast as recently as October. Just a few weeks ago, the ad growth was expected to be at just under one percent. Back in June it was slated 2.6% growth.

Ad spending in North American major media in 2009 is expected to reach $171 billion, down from 2007's $188 billion. Globally it is expected to hit $490.5 billion next year, a decline from $491.6 billion the year before. The 0.2% drop is the first ad decline since 2001 when the Internet bubble burst and the September 11 attacks slowed consumer spending. 

In a statement released today, the agency stated, "The global market will be very tough in Q1 2009 and Q2 is unlikely to look much better. But we expect a mild recovery to begin in Q3, a year after the start of the downturn, and pick up in Q4 when the year on year comparatives will start to get a lot easier."  

If there is a silver lining on the economic cloud for TV executives, it is ZenithOptimedia's prediction that advertisers will return to the "familiarity and brand building power of television, giving it a market share of 38.5% in 2009," that's up half a point on 2008. In North America, spot TV is expected to have a rougher ride given the difficulties associated with the automakers. Globally TV is expected to take $185 billion in ad revenue. 

The agency suggests that recessional environments tend to encourage additional TV viewing because of the medium's low price relative to other forms of entertainment. Meanwhile newspapers, radio and magazines will all see ad dollars shrink.

The web remains a bright spot. ZenithOptimedia reports that global Internet advertising will continue to grow, reaching $58 billion next year, up from $50 billion in 2008.

Global ad revenue is expected to drop 0.2% next year to $490.5 billion, though Asia Pacific and the Central and Eastern European regions are expected to continue growing. ZenithOptimedia which works on behalf of company's including British Airways, General Mills and Nestle, says developing markets will contribute 89% of ad expenditure growth between 2008 and 2011.

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