Developing Markets Propel World Ad Expenditure Growth

The credit crunch continues to worry investors, consumers and advertisers in Western markets, so Zenith has downgraded its forecasts for ad expenditure growth in 2008 from 3.7% to 3.5% for North America, and from 3.9% to 3.7% for Western Europe.

Zenith expects ad expenditure outside North America and Western Europe to grow 11.8% over the course of this year, 0.7 percentage points more than it forecast at the end of March.

The net result is that Zenith predicts the world ad market will grow 6.6% this year, fractionally more than the 6.5% predicted earlier in the year and well above the 5.2% rate at which it has grown in the past 10 years.

Advertising Expenditure By Major Media (US $million, current prices)
	2006	2007	2008	2009	2010
North America	183,520	188,415	194,990	200,271	207,570
Western Europe	113,513	119,976	124,420	129,770	135,781
Asia/Pacific	94,719	102,807	111,534	119,001	127,916
Central & Eastern Europe	25,799	31,563	37,041	42,628	48,424
Latin America	22,638	26,329	30,924	35,130	38,920
Africa/ Middle East	13,406	16,490	18,606	21,871	25,938
World	453,595	485,580	517,515	548,671	584,550
Source: ZenithOptimedia, June 2008

Year-On-Year Percentage Change
Major Media (newspapers, magazines, television, radio, cinema, outdoor, internet)
	2006 v 05	2007 v 06	2008 v 07	2009 v 08	2010 v 09
North America	5.3	2.7	3.5	2.7	3.6
of which USA	5.2	2.5	3.4	2.6	3.6
Western Europe	5.6	5.7	3.7	4.3	4.6
Asia/Pacific	6.6	8.5	8.5	6.7	7.5
Central & Eastern Europe	18.4	22.3	17.4	15.1	13.6
Latin America	14.5	16.3	17.5	13.6	10.8
Africa/ Middle East	25.9	23.0	12.8	17.5	18.6
World	7.3	7.1	6.6	6.0	6.5
Source: ZenithOptimedia, June 2008

Between 2007 and 2010, Zenith predicts that developed markets (North America, Western Europe and Japan) will contribute 38% of new ad expenditure, while developing markets (everywhere else) will contribute 63%. Over that period the proportion of global ad expenditure going to developed markets will rise from 27% to 33%.

Internet advertising is expected to grow 26.7% and break through the 10% share barrier this year. By 2010 it is predicted to attract 13.6% of all advertising, well ahead of Zenith’s previous prediction of 12.3%.

A report from eMarketer forecast that internet advertising spending will continue to show double-digit growth through 2010, passing £4.3 billion in 2010 and exceeding £5 billion in 2012 (see Online Adspend To Rise 27% In 2008).

Newspapers’ share of the global ad market fell by 7.6 percentage points in the 10 years to 2007, and Zenith expects it to fall another 3.5 points by 2010.

Outdoor is expected to increase its share of the global ad market from 6.2% in 2007 to 6.7% in 2010.

Earlier this month, PricewaterhouseCoopers (PwC) released its annual global advertising revenue forecast, estimating that global revenues will rise by an average of 6.6% a year by 2012, reaching to $2.2 trillion (see Global Advertising Revenue To Reach $2.2 Trillion by 2012).

These figures position the sector as outpacing GDP, which is forecast to increase by 5.7%.