Global ad spending to grow 4.1% in 2011

PARIS: The global advertising market is still expected to return to pre-recession levels this year, despite Europe's debt crisis and economic uncertainty slowing demand in the United States and Europe, according to media buyer ZenithOptimedia.

North America and Europe's weakness is in part being offset by strength in Asia, where the impact of Japan's earthquake has turned out to be “less disruptive” than Zenith had initially feared.

The Publicis-owned agency slightly reduced its forecast on Wednesday, saying that the global spend on advertising in 2011 would grow 4.1% to US$471bil, instead of the 4.2% predicted in April.

The revised figure is also off the 4.6% growth Zenith had first predicted for 2011 and reflects the impact of unforeseen events such as the earthquake and political unrest in the Middle East.

“The ad market continues to recover from the 2009 recession, but growth has dipped this year in response to economic pressures, natural disaster and political disruption,” Zenith said in a statement.

“High oil prices have depressed consumer and corporate expenditure, and worries about public debt on the European periphery particularly the threat of default in Greece have damaged confidence in the stability of the world economy, the eurozone in particular,” it said.

Zenith cut its 2011 growth forecast for North America to 2.3% and that for Europe to 3.3%, down 0.3 and 0.2 percentage points respectively.

Meanwhile, Asia-Pacific is expected to grow 5.9% this year, higher than the 4.6% Zenith had forecast in April.

Ad spending in the Middle East and Africa is set to decline markedly because of ongoing political unrest, with Zenith predicting a drop of 12.1% in 2011.

But the impact of this sharp drop on the overall industry will be limited by the fact that it only accounts for 1 percent of global ad spend.

The largest advertising markets are the United States at US$151bil, Japan at US$46bil, and China at US$26bil, according to Zenith's 2010 figures.

Zenith predicted some of the ad spending being knocked off course this year by the ongoing economic fragility will be deferred into next year: “More robust growth is forecast to resume in 2012 and 2013,” it said.

The agency increased its prediction for 2012 growth to 5.9% from 5.8% in April, saying events like the Olympics in London and European Football Championship would boost sales.

Growth will then slip to 5.6% in 2013, according to Zenith.

Major advertising groups begin to publish their first-half financial results next week with Publicis's figures due on July 21. Havas , Aegis and WPP will release their second-quarter figures in late August. Reuters