Modest US Ad Growth Predicted For 2007
Universal McCann is projecting US advertising expenditure in 2006 to total $285.1 billion, a gain of 5.2% over 2005.
Last year McCann forecast that total US advertising would increase 5.8% in 2006. However, it says that it is now clear that ad growth in 2006 will be below what it expected a year ago.
According to Merrill Lynch’s annual bottom-up analysis, released this week, ad spending in the US will increase by 2.6% in 2007 (see Online Continues To Blossom As ML Raises 2007 Ad Forecast).
It adds that in 2007 it expects quite modest growth in US advertising, with a gain of only 4.8% for a forecasted total of $298.8 billion. It will probably not be until 2008 or later until a significant improvement in ad activity reappears.
| Outlook For 2007 US National Advertising | |||
| % Change Over 2006 | 2007 Projections $(000,000) | ||
| 4 TV Networks | 3.0% | $17,442 | |
| Spot TV | 0.0% | 11,144 | |
| Cable TV | 6.5% | 20,362 | |
| Syndication TV | 6.0% | 4,301 | |
| Radio | 4.0% | 4,588 | |
| Magazines | 5.0% | 14,096 | |
| Newspapers | 1.0% | 7,313 | |
| Consumer Media Sub-Total | 3.8% | 79,246 | |
| Direct Mail | 7.5% | 64,405 | |
| Yellow Pages | 3.0% | 2,229 | |
| Internet | 15.0% | 10,715 | |
| Other National Media | 5.7% | 39,045 | |
| Total National | 5.9% | $195,640 | |
Economic expansion in most countries in the world is expected to continue to be reasonably good again in 2007. Overseas advertising is expected to rise 5.8% in 2007 to $332.6 billion. In 2007, total worldwide advertising is expected to rise 5.3% to $631.4 billion.
The combined spending for advertising next year by national and local marketers is now projected for a total of $298.8 billion, a gain of 4.8% over 2006. Next year Universal McCann expects total US advertising to come close to matching the growth in the economy.
In 2007 US advertising growth is expected to moderate and rise at a slower rate than McCann now expects for all overseas countries. The net result is that it now expects global ad growth in 2007 to match the 5.3% gain of 2006.
McCann forecasts worldwide advertising growth in 2007 of 5.3%, assuming that there is no change in exchange rates.
It adds that as the advertising industry is currently undergoing many changes and transitions and a high level of uncertainty about what lies ahead, it is likely that worldwide advertising will probably grow at a pace closely related to global economic growth in 2007.
| Economic Trends In Major Markets (Percentage Change In Real GDP Over Previous Year) | |||
| Country | 2005 | 2006 | 2007 |
| United States | 3.2% | 3.4% | 2.7% |
| Canada | 3.0% | 2.9% | 2.8% |
| Japan | 2.6% | 2.7% | 2.4% |
| Germany | 1.1% | 2.2% | 1.6% |
| United Kingdom | 1.9% | 2.7% | 2.5% |
| France | 1.2% | 2.2% | 1.6% |
| Italy | 0.1% | 1.8% | 1.6% |
| Brazil | 2.3% | 3.3% | 3.5% |
| Mexico | 3.0% | 4.6% | 3.4% |
| Australia | 2.7% | 2.9% | 3.3% |
| South Korea | 4.0% | 5.2% | 4.7% |
| China | 10.2% | 10.2% | 9.1% |
| India | 8.4% | 7.5% | 6.8% |
GroupM’s latest media and marketing forecast report said that global advertising growth is steady and in line with the global economy at 5.3% for 2006, and set to be 5% for 2007 (see GroupM Forecasts Steady Global Ad Growth).
Meanwhile, ZenithOptimedia forecast that the global ad market will grow 5.4% in 2007, 5.8% in 2008 and 5.3% in 2009, staying ahead of the 5.1% rate it has grown at for the past ten years (see Global Adspend Growth Fuelled By Online).