Global ad spending to drop, advisor says

Bloomberg

Spending will fall 6.9 percent to $453.2 billion, more than the 0.2 percent drop forecast in December, Zenith said yesterday in a statement. U.S. outlays will slump 8.7 percent, compared with a previous estimate of 6.2 percent, said Zenith, a unit of Paris-based Publicis Groupe that advises companies on ad purchases.

Ad expenditures will drop from their 2008 peak after economies contracted around the world, forcing Zenith to cut its estimates for the third time in about six months. While Zenith anticipated declines in the U.S. and western Europe in December, it didn’t account for plunges in Brazil and Russia.

"Since we released our last forecasts in December the global ad market has taken a substantial turn for the worse," Zenith said. "Ad expenditure correlates strongly with corporate profits, and the ad market is unlikely to start its recovery until profits start to pick up again."

Golden age of Internet
Internet will be the only medium to see increasing spending, boosted mainly by search advertising provided by companies such as Google, the market leader. Online spending may gain 8.6 percent to $54.3 billion, Zenith said. In the U.S., search advertising will rise 9 percent, while display ads will shrink 1.8 percent, Zenith estimates.In the past few years, the number of sites has risen about twice as fast as online spending, most of which goes to the largest Internet companies, Zenith said.