Worldwide Advertising Forecasts From ZenithOptimedia

Worldwide ad expenditure for 2002 came in at $315.3 billion, representing an improvement over 2001 of 0.9% in current prices but a 0.2% fall in constant prices. These figures were slightly ahead of December’s forecasts with Europe, in particular, performing better than anticipated (see Forecasts).

However, the European recovery has since been put on hold (see Forecasts) and North America is expected to outperform other western markets in 2003. The figures support the notion that real growth will not be forthcoming in major countries until 2004.

Worldwide Advertising Expenditure By Region ($USm)
	2001	2002	2003	2004	2005
North America	146,668	149,628	153,761	160,844	166,965
of which: USA	141,635	144,388	148,325	155,240	161,224
Canada	5,033	5,240	5,436	5,604	5,741
Europe	76,904	76,669	77,981	81,152	84,599
of which: France	9,158	9,031	9,143	9,399	9,680
Germany	17,696	16,973	16,818	17,409	18,367
Italy	7,334	7,074	7,110	7,320	7,581
Spain	5,146	5,083	5,148	5,347	5,566
UK	15,203	15,215	15,282	15,774	16,218
Asia-Pacific	61,297	61,934	64,467	67,570	71,458
Latin America	18,269	16,154	16,299	16,855	17,540
Rest of World	9,432	10,910	12,004	13,363	14,748
Major media total	312,571	315,295	324,511	339,785	355,310

World Advertising Growth Forecasts
	2002 v 2001		2003 v 2002		2004 v 2003		2005 v 2004
	Current prices	Constant prices	Current prices	Constant prices	Current prices	Constant prices	Current prices	Constant prices
North America	2.0	0.3	2.8	0.7	4.6	3.3	3.8	2.4
of which: USA	1.9	0.4	2.7	0.7	4.7	3.4	3.9	2.5
Canada	4.1	1.8	3.7	0.3	3.1	0.9	2.4	0.1
Europe	-0.3	-2.2	1.7	-0.5	4.1	2.4	4.2	2.5
of which: France	-1.4	-3.3	1.2	-0.7	2.8	1.4	3.0	1.5
Germany	-4.1	-5.3	-0.9	-1.9	3.5	3.2	5.5	5.0
Italy	-3.5	-5.5	0.5	-1.8	3.0	1.0	3.6	1.5
Spain	-1.2	-4.2	1.3	-2.0	3.9	1.5	4.1	1.6
UK	0.1	-1.4	0.4	-2.6	3.2	1.1	2.8	0.8
Asia-Pacific	1.0	1.0	4.1	3.6	4.8	4.2	5.8	5.0
Latin America	-11.6	–	0.9	–	3.4	–	4.1	–
Rest of World	15.7	–	10.0	–	11.3	–	10.4	–
Major media total	0.9	-0.2	2.9	1.0	4.7	3.3	4.6	3.0
Source: ZenithOptimedia, June 2003

With global economic growth not predicted to exceed 3% in the next few years, there is little impetus for an advertising boom and the recovery has been hindered by events in the Middle East and the Sars virus.

The protracted build-up to hostilities did at least ensure that the industry was prepared for the war in Iraq and could make contingency plans. Sars was different in that it arrived with less warning and had a dire effect on Far Eastern markets and tourism. However, the situation is now under control and as the world’s fastest growing economic area, North Asia is set to witness a boost in advertising spending.

US outlook For the main part, US advertising was able to ride the storm in the first half of 2003. Strong TV upfronts have increased the confidence of marketers (see Forecasts) and the general outlook is promising. Zenith believes that adspend will increase by 2.7% (in current terms) this year and with the Olympics and a presidential election to come in 2004, there is scope for further growth, despite the uncertain state of the economy.

“USA advertising is performing more strongly than the expectations of underlying economic performance would normally merit. Leading advertisers are the motor driving growth evenly across all media. This is high-quality momentum,” says the report.

Stagnation in Europe Europe continues to underperform and any revival has been put off until 2004. The eurozone, which includes Germany, France, Spain and Italy, is exposed as the slowest growing economic grouping in the developed world and the advertising market is contracting in real terms for the third year in a row. The UK is faring no better and with consumer demand on the slide, there is little prospect for strong growth in the remainder of 2003. A slow-burning recovery is more likely with Zenith predicting a 3.2% rise in revenues next year.

UK television companies have been looking for signs of an upsurge in the first half of 2003 but this latest study offers little in the way of encouragement with no knock-on effect from the other side of the Atlantic.

“The TV market is notably uninfected by US upfront enthusiasm having endured the worst share loss of any medium since 1999, with no prospect of restoring its real revenue within this forecast,” says Zenith.