Forecaster raises 2010 advertising spending forecast as confidence in economic recovery rises

By Deborah Yao, AP
Thursday, April 8, 2010

Forecaster raises 2010 ad spending forecast

A leading advertising forecaster is raising its 2010 outlook on global ad spending — the most bullish reading it has had in more than a year — saying companies are gaining more confidence that the economic recovery will stick.

ZenithOptimedia expects combined ad spending in various media — including newspapers, television and billboards — to grow by 2.2 percent this year to $456 billion. That’s up from its previous forecast of slightly less than 1 percent, made in December.

It’s the second time the forecaster has upgraded its 2010 outlook. The upgrades followed 18 months of consecutive downgrades.

ZenithOptimedia said Wednesday that ad spending is stabilizing among developed nations in North America, Western Europe and Japan while developing economies are expected to resume their rapid growth.

Ad spending is still expected to fall in the U.S., by 2 percent. North America, which covers the U.S. and Canada, is the only region expected to see a decline, by 1.5 percent, because it led the ad downturn and will be the last one to recover.

Worldwide, online ad spending is expected to increase by nearly 13 percent this year to $62.6 billion. Internet ads, which overtook magazines last year with a 12.6 percent share of the total ad market, should take a 17 percent market share in 2012. It would be the third-largest recipient of ad spending, after TV and newspapers.

But newspapers, magazines and radio are expected to continue struggling around the world. Newspapers should see a 3.8 percent decline in ad spending to $97.7 billion while magazines should see a bigger slump of 4.4 percent to $43.3 billion. Ad spending on radio should dip less than 1 percent to $33.5 billion.

Worldwide ad spending on television, however, is expected to increase by 4.4 percent to $181 billion, as people continue to embrace entertainment during the downturn. TV also is seen as a key medium for companies to build brands.

Outdoor ad spending should increase as well, by 1.7 percent to $29 billion.

ZenithOptimedia also raised its 2011 global ad spending forecast, to 4.1 percent from 3.9 percent, and for 2012, to 5.3 percent from 4.8 percent.

The new forecast came as the Interactive Advertising Bureau said online advertising revenue grew by 2.6 percent in the fourth quarter compared with a year earlier, the first such increase in more than 12 months as companies became more comfortable with spending on marketing.

“The worst of the economic impact on Internet advertising is over and that the seeds of growth have been planted,” said David Silverman of Pricewaterhousecoopers, which conducted the study for the bureau.

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