European advertising growth is expected to grow by over 4% in the next year and overtake the US, according to a revised outlook from ZenithOptimedia.
The media agency has today announced that it has updated its European advertising forecast to 4.2% from 3.7%, after its 2003 Europe-wide prediction of 1.8% was beaten when growth reached 2.5% for the year.
Internet advertising is expected to be a key player in producing revenue and by 2006 will account for 2% of Europe’s major-media advertising budgets. The internet in the US is already twice as influential – where it accounts for over 5% of the market – than it is here in Europe.
Innovations in ambient, in-store, product placement, sponsorship and co-promotions are also attracting more spend, according to Zenith, and may partly explain the absence of rapid, inflationary recovery in traditional media which has been seen in past recoveries.
| Advertising Expenditure | |||||
| Major Media (newspapers, magazines, television, radio, cinema, outdoor, internet) | |||||
| US$ Million, Current Prices | |||||
| 2002 | 2003 | 2004 | 2005 | 2006 | |
| North America | 150,308 | 153,231 | 161,864 | 168,004 | 175,985 |
| USA | 144,464 | 147,168 | 155,592 | 161,560 | 169,341 |
| Canada | 5,843 | 6,063 | 6,273 | 6,444 | 6,644 |
| Europe | 86,897 | 89,072 | 92,788 | 96,540 | 100,889 |
| France | 10,777 | 10,769 | 11,111 | 11,450 | 11,843 |
| Germany | 17,712 | 18,037 | 18,509 | 19,019 | 19,888 |
| Italy | 8,503 | 8,783 | 9,127 | 9,496 | 9,890 |
| Spain | 6,099 | 6,278 | 6,523 | 6,793 | 7,085 |
| UK | 16,588 | 17,028 | 17,778 | 18,399 | 19,085 |
| Asia-Pacific | 66,211 | 69,771 | 74,256 | 78,267 | 82,367 |
| Japan | 36,251 | 36,222 | 37,302 | 37,877 | 38,227 |
| Latin America | 14,052 | 14,452 | 15,226 | 15,991 | 16,964 |
| Rest of World | 11,443 | 13,645 | 15,406 | 17,168 | 19,059 |
| Major Media Total | 328,910 | 340,171 | 359,541 | 375,970 | 395,264 |
| Source: ZenithOptimedia, July 2004 | |||||
United Kingdom
In the update Zenith said that as with Europe, UK online advertising expenditure continues its rapid ascent. The sectors leading internet spend are finance, travel, IT and automotive, while entertainment and FMCG advertisers have greatly increased their expenditure.
The TV market seems to have been given a genuine restoration of confidence and as a result Zenith expects strong growth of 7% for the first half of 2004 and 5% for the full year, which has largely been fuelled by Euro 2004.
In print, press is buoyed by the retail, automotive and travel sectors and introduction of smaller-format versions of broadsheet newspapers have also helped, said the update. Magazines however are suffering because advertisers prefer to commit late but the launch of Nuts and Zoo is encouraging said Zenith as it allows new choice for advertisers.
The out-of-home sector has also benefited from innovation and the next general election, which will take place before May 2006, is expected to have a positive impact on this sector.
Radio is expected to gain market share with advertisers increasing total spend, rather than just shifting it from another medium. Proctor and Gamble continues to be the second-largest advertiser in radio.
United States
Throughout 2004, the US advertising market has shown sustained strength and the remainder of the year is expected to outgrow forecasts as the presidential elections and Olympic games further spur advertising spend.
Zenith has forecast that total major media advertising expenditure will grow by 5.7% in 2004, up 0.2% from the April forecast, with network and cable television driving the year-to-year increase.
Japan
Advertising expenditure in Japan stagnated during 2003 but Zenith thinks this now has turned a corner and expects spending to pick up during the second half of the year spurred by the general election to the Lower House and the Tokyo Motor Show.
The update says that advertising spend in Japan will reach a healthy 3% in 2004, and then moderate to 1.5% and 0.9% in 2005 and 2006 respectively.
