Advertising Expenditure Forecasts-1990

Zenith has issued its 1990 Advertising Expenditure Forecasts, examining the industry through to 1993. The full report is available from Zenith Media Worldwide, 071 224 8500, at a cost of £130. Global advertising expenditure for the five major media is estimated to be $202bn in 1990 (up 6.8% from 1989, or 1.6% in real terms). The top ten countries account for 86.2% of this expenditure. The five major media combined with direct mail and sales promotion are $267bn in 1990, and will be $326bn by 1993. The report looks at North America, Europe, Asia/Pacific, Latin America/ Caribbean and “Rest of the World”.

ADVERTISING EXPENDITURE FORECASTS-1990 World Advertising Expenditure Summary (US $m at current prices)

* – TV, print, radio,cinema, outdoor

Zenith – 071 224 8500

AD EXPEND AS PROPORTIONOF GDP (%)

Looking at Europe as a whole in terms of advertising expenditure, the report asserts that “it is very difficult to generalise about the ‘European experience'”. The UK is expected to be the worst performing market with ad- spend down by nearly 7% in real terms in 1990. Greece is forecast to have the highest nominal and real growth rates at 40% and 16.7% respectively (1990 v 1989). Outside the UK, the four core markets of France, Germany, Italy and Spain are still showing very respectable real growth rates. Spain will remain the best pperforming market in real terms over the forecast period to 1993, with increases averaging 13.7% per year after taking out inflation. On balance, the report concludes that the European advertising industry will ride the current recession and achieve above average growth rates in the period 1993 and beyond.

European Ad Expnd(US $m current prices)

Ad Expend (US $m at current prices)

The report goes on to give a brief overview of each country, breaking down advertising expenditure between the major media. In France, despite the television forecast reduction, TV is the medium which will continue to grow more rapidly than any other. Newspaper, magazine and radio sectors are all reasonably mature and no high growth is expected. The small cinema sector is in decline. Magazines took 33% of all advertising revenue in 1980, but only 27% in 1990. Television has grown during the 1980’s, principally at the expense of the magazine sector, growing from a 14.3% share in 1980 to 25.1 in 1990.

FRANCE: Ad Expend In US$m(at current prices), 1US$=6.3801 F.Francs

NOTES: Includes agency commission Excludes production costs Includes classified advertising Discounts have not been deducted Excludes taxes In Germany TV expenditure has increased in recent years, due to the arrival and establishment of private commercial channels, principally RTL Plus and Sat 1. As these channels establish themselves,the report posits, the rate of TV ad growth will fall, although the 1992 Olympics should boost advertising. Despite the gradual decline in TV expenditure growth, it will remain the fastest growing medium. TV’s share of ad expenditure in 1980 was only 10.1%, increasing to 14% in 1990 and 16.4% in 1993. Newspapers have lost some of their dominance, falling from 49.6% in 1980 to 44.6% in 1990 and 43.3% by 1993.

GERMANY:Ad Expend In US$m (current prices), 1US$=1.88 D.Marks

NOTES: Excludes agency commission Excludes production costs Includes classified advertising Discounts have been deducted With regard to Italy the report estimates that for 1991 and 1992 TV revenues will be slightly down on previous forecasts, reflecting the self-imposed restrictions by private networks on advertising time permitted each hour. The newspaper category will grow at a rate favourable to TV over the next three years. Local and regional press will fare well, as their readership figures continue to improve and they are used more by small and medium sized companies in regional campaigns. The TV sector is fairly mature, but the other media have yet to reach the level of development that the “European majors” have.

ITALY: Ad Expend in US$m (at current prices), 1 US$=1372.1 Lire

NOTES: Excludes agency commission Excludes production costs Excludes classified advertising Discounts have been deducted Mags includes newspaper supps In Spain the rate of growth in the industry will decline during 1991, following falls in profits during 1990. However, the rate of growth will increase substantially during 1992 because of the Olympic Games and the World Expo. 1993 will see a decline as this media boom falls away. Some of the new TV channels have proved to be less popular than anticipated, especially some of the regional channels, which have had difficulty competing with the established networks. The new private channels have been building viewing share, which reached 13.3% in Sept. (1.3% in Jan.). Newspapers took 37% of total ad expenditure in ’89 and this will be maintained.

SPAIN: Ad Expend in US$m(at current prices), 1US$=118.38 Pesetas

NOTES: Excludes agency commission Excludes production costs Excludes classified advertising Discounts have been deducted In the UK expenditure is expected to fall 6.7% in real terms. This scenario is anticipated to continue into 1991, but the fall will be less severe, -2.5% in real terms. TV will fall 8.7% in real terms in 1990. 1991 will be another soft year, falling 3.5% in real terms. However, recovery is anticipated by 1992 on the back of falling TV costs. 1993 will be a buoyant year, with the launch of C5, the new C3 licences, and the growing satellite sector. Radio will benefit from the new national and local stations. The print media will lose out to some extent to the broadcast media; recovery, though only small in real terms, will come in 1993.

UK: Ad Expend in US$m (at current prices), 1US$=0.61 Pounds

NOTES: Includes agency commission Includes production costs Includes classified advertising and regional newspapers Discounts have been deducted