Ad spending forecast worsens but global recovery seen in 2010

Ad spending forecast worsens but global recovery seen in 10 Reuters 7/10
The downturn in global advertising is approaching its lowest point &, after a fall of 8.5% in 2009, the industry should see a mild recovery in 2010, a leading media agency predicted. ZenithOptimedia said it revised down its forecast for ; 09, from an earlier prediction of a 6.9% drop, after 1st-Q came in worse than expected. WPP's Group agency said in June it expected global adv to drop 5.5% in '09 before a mild recovery in '10. "Faced with extreme uncertainty, advertisers in most sectors planned for the worst and cut their costs in anticipation of steep drops in revenue," the Zenith report said. The U.S. is among the hardest hit markets & a recovery is not expected until 2011. "Looking at the different regions, those that went into the ad downturn first will suffer the most and come out of it last. We expect North America to shrink a further 2.4% in 2010, after shrinking 3.7% in 2008 and 10.3% in 2009." Of the different platforms, the Internet is the only medium expected to grow in '09, while TV, cinema & outdoor advertising are set to decline less than the overall market. Advertisers say using the Internet allows brands to be flexible & see consumer response rates, which is important in a downturn. Zenith forecast Internet advertising expenditure growth of 10.1% in 2009 & said it expected the medium to account for 15.1% of all ad expenditure by 2011, from 10.5% in 2008. "Most of this growth will come from paid search, which is an ideal method of reaching consumers looking for bargains," the report said. "In the U.S. we predict search advertising to grow 20% in 2009, while traditional display grows 3% & classified grows just 1.8%. But with the move of money from print to online, the paper industry was hurt. Newspaper adv was predicted to shrink 14.7% while magazines face an even tougher time as luxury advertisers pull back. Zenith said the sectors of finance, autos & business travel all suffered steep revenue decline while retail, fast-moving consumer goods and value products fared better. "For all sectors the shape of the rest of the year is becoming clearer," it said. "Q2 was not quite as tough as Q1, & we held our expectations for the rest of the year steady, as signs emerge that the downturn is approaching its nadir." For '10, Zenith predicted a recovery & growth of 1.6%.