ZenithOptimedia, in its global ad spends predicts Internet ad spends to overtake radio in 2008. The Internet will grow six times faster than traditional media between 2006 and 2009, and increase its share of the ad market from 5.8 per cent to 8.7 per cent.
All of the fastest-growing ad markets are in the Middle East, and Central and Eastern Europe. These regions are growing at double-digit rates, compensating for an under-performing North America. The study also shows that world ad spends will grow by 5.2 per cent in 2007, on par with long-term trend. Olympics, elections and football are likely to lift the growth to 6.2 per cent in 2008.
In global advertising expenditure by medium, ZenithOptimedia predicts that Internet ad spends will grow 28.2 per cent in 2007, while the rest of the market grows 3.7 per cent. A communiqué quoted, “We now expect the Internet to overtake radio in 2008, a year earlier than in our last forecast. We forecast the Internet to account for nearly 9 per cent of global ad spends by 2009, and its share should reach double digits early next decade. The Internet already attracts more than 10 per cent of ad spends in three markets of Norway, Sweden and the UK. By 2009, we expect it to grow at a similar rate in 11 markets of Australia, Canada, Denmark, Israel, Japan, Norway, South Korea, Sweden, Taiwan, the UK and the US. The Internet has its highest share in the UK, where it will attract 16.6 per cent of ad spends this year and 22.6 per cent in 2009.”
Apart from the Internet, only cinema and outdoor are forecast to grow faster than the market to 2009. Cinema is new and growing quickly in the US, while outdoor continues to gain share as contractors invest in better displays and better research.
“Last December, we voiced concerns that television was about to enter its first-ever sustained period of market-share loss at the global level. Demand has picked up since then, and we have revised our forecasts for television expenditure upwards. We now expect television’s share of global ad expenditure to be just 0.2 percentage points lower in 2009 than it was in 2005,” the communiqué stated.
The report said: “We have downgraded our forecasts for newspapers and magazines as publishers — eyeing the growth rate of Internet advertising — and have decided to invest more in their online products and less in print. Ad expenditure is still growing in both the media, in nominal terms at least. After adjusting for inflation, newspaper expenditure is essentially stagnant, as readers and advertisers migrate to the Internet.”
ZenithOptimedia predicts the world ad market will grow fractionally above its trend rate in 2007 after a stronger-than-average year in 2006. Over the last 10 years, ad expenditure has grown at an average rate of 5 per cent annually. It grew by 6.2 per cent in 2006, thanks partly to the Winter Olympics and the FIFA World Cup, and it is expected to grow by 5.2 per cent in 2007. The year 2008 is a quadrennial one, since it will contain the summer Olympics, presidential elections in the US, and the European football championship — all of which are traditionally strong stimulants of advertising. “We therefore expect growth to rise by one percentage point to 6.2 per cent in 2008 before falling back to 5 per cent in 2009,” the report said.
The Middle East, and Central and Eastern Europe are emerging as fast growing and rapidly maturing media markets, while advertising is playing a growing role in local economies. High oil prices, if erratic, are providing a boost to several countries in both regions. The report stated: “We expect growth in Africa/Middle East/Rest of World region, which is mainly driven by the Middle East, and in Central and Eastern Europe to remain comfortably in double digits over our forecast period.”
Ad expenditure in Asia Pacific is accelerating in the run-up to the Beijing Olympics in 2008, when growth should reach 7.7 per cent; and growth is expected to slip to 4.9 per cent in 2009 when the one-off Olympics activity drops out. China, India, Indonesia and Vietnam all continue to grow at double-digit rates and should continue to do so.
“The shift in publishers’ investment from print to the Internet now leads us to expect no growth from newspapers in the US this year, and less growth from magazines than we forecast in December. Over the last 10 years, the North American ad market has grown at an average rate of 5.3 per cent, so its current performance is disappointing, with average growth in 2006 and below-average growth forecast for 2007 to 2009.”
Continued signs of improvement in Germany encourage raising forecasts for German ad growth slightly, but Germany is still expected to remain the slowest-growing market in the region. The ad market in Western Europe is however still growing at about its long-term average rate of 3.9 per cent.
The communiqué stated: “We have upgraded our forecasts for Latin America from 4-5 per cent annual growth to 6-7 per cent, mainly because Argentina has demonstrated continued growth in ad volumes despite high media inflation. This is well above the 3 per cent long-term annual growth rate of the Latin American ad market.”