Global Ad Spending To Increase 6.8% In 2008

Adam Smith, GroupM Futures director, said: “Encircling economic gloom has not affected GroupM’s view of marketing investment in 2008, which is supported by events including the American elections, the Beijing Olympics, and the European soccer championships.

Expectations of media growth in North America, Western Europea and Japan, which combined represent nearly three-quarters of the global media economy, are in any case conservative.”

Smith also identified television and the internet as the primary engines of global ad growth, representing the vast majority of additional new investment in 2008.

He said: “We expect half of 2008’s new ad dollars to find their way into TV, which dominates advertising in emerging markets and is the lead medium in US elections and Olympics coverage. We predict internet will soak up 28% of new investment and lead advertising growth in the developed world, particularly Western Europe.

“The internet is far less important to growth in emerging markets, where TV advertising does the most to build brands and a consumer economy.”

Western Europe is the second largest media bloc, representing about 27% of total media investment. GroupM predicted its contribution to 2008 ad growth at only 16%, well below expected economic growth.

Spending in CHina, meanwhile, was expected to grow 25%, a decline from the previous year’s 29% growth but still a representative figure.

“China still contributes 21% of new media dollars ahead of our 2008 forecast and is thus our biggest contributor in 2008, ahead of the US with 20% and Russia and Brazil with 6% each,” said Smith.

Global Ad Forecast, 2006-2008
Media USD, m	2005	2006	2007f	2008f
North America	160,752	169,029	174,116	180,961
yoy%	4.2	5%	3%	4%
USA	150,773	158,091	162,585	168,594
yoy%	4.2	4.9	2.8	3.7
Latin America	12,107	14,379	16,586	19,287
yoy%	29.1	18.8%	15.3%	16.3%
Western Europe	110,988	116,360	121,979	127,171
yoy%	4.4	4.8%	4.8%	4.3%
Emerging Europe	13,967	17,110	20,559	24,227
yoy%	20.9	22.5%	20.2%	17.8%
Asia-Pacific (All)	91,202	96,713	104,370	114,828
yoy%	6.9	6.0%	7.9%	10.0%
North Asia	29,216	32,810	37,087	44,022
yoy%	12.5	12.3%	13.0%	18.7%
ASEAN	7,410	7,999	8,715	9,529
yoy%	10.1	7.9%	9.0%	9.4%
Middle East & Africa	8,385	9,630	10,982	12,417
yoy%	11.8	14.8%	14.0%	13.1%
World	397,401	423,222	448,592	478,891
yoy%	6.2	6.5%	6.0%	6.8%
Source: GroupM

Marketing, USD, m	2005	2006	2007f	2008f
WORLD
PR	5,896	6,530	7,076	7,631
Market Research	23,002	24,473	25,963	27,532
Direct & Specialist	226,866	240,271	254,433	268,022
Healthcare	6,193	6,484	6,800	7,200
Sponsorship	30,500	33,670	37,730	43,500
Total	292,458	311,428	332,002	353,884
YOY% Change
PR	7	11	8	8
Market Research	7	6	6	6
Direct & Specialist	6	6	6	5
Healthcare	4	5	5	6
Sponsorship	9	10	12	15
Total	6.3	6.5	6.6	6.6
Source: GroupM

Meanwhile, the Long Term Advertising Expenditure Forecast, compiled by the World Advertising Research Center on behalf of the Advertising Association, predicts that advertising expenditure in the UK could grow by as much as 37.9% in real terms by 2019 (see UK Adspend Could Grow 38% By 2019).

The report looks at two possible scenarios for UK adspend, a ‘high option’ and a ‘low option’; the low option forecasts an adspend increase of 16.8% over the same period. In terms of compound annual growth rate (CAGR), this translates as 2.5% on the high option, but a mere 1.2% on the low.

A recent forecast from eMarketer predicted that UK online ad spending will pass £3 billion in 2008, and show healthy growth despite financial and political uncertainties in Britain (see UK Online Adspend To Pass £3bn In 2008).