Global ad expenditure expected to rise

The global advertising market is looking robust as advertisers are in a better position than they were at the start of the downturn in 2008, says ZenithOptimedia’s latest report.

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The media company says that advertisers have built up large cash reserves since 2008 but as they are earning poor interest rates, companies are likely to invest in advertising “in competition for marker share, and as a way of stimulating extra consumption.”

The media agency network predicts global ad expenditure will grow 4.7% in 2012, up from 3.5% in 2011, despite the crisis in the Eurozone. Expenditure is then expected to rise 5.2% in 2013 and 5.8% in 2014.

It attributes the robustness to the “quadrennial” effect of four events next year, the Olympics, European Football Championship, US Presidential elections and other elections, alongside a recovery in Japan from the earthquake earlier this year.

Western Europe is expected to show smaller growth, predicted at 2% in 2012, despite the fillip of the London 2012 Olympics. The forecast assumes that GDP will continue to slow in the Eurozone and assumes that even if conditions deteriorate the impact on global growth will be “limited”. Defaults in two Eurozone countries could turn growth into a -4% reversal but global ad expenditure would still rise by 3.2%.

As expected, most of the growth is coming from developing markets, forecast to contribute 58% of new ad dollars between 2011 and 2014. Overall developing markets are expected to increase their share of the global ad market from 32.3% in 2011 to 35.9% in 2014.

There are now two developing markets, China and Brazil, in the top 10 ad markets, and Russia is expected to join the list by 2013.

Broken down by medium, the internet continues to grow faster than any other with display advertising its fastest growing segment, driven by online video and social video. Overall internet advertising is predicted to increase share from 15.9% in 2011 to 21.2% in 2014. After the internet, television is the main contributor to global ad growth. Newspapers and magazines will see their share continue to decline.

UK ad spend was recently downgraded to grow 0.9% in 2011 in the Advertising Association/Warc ad expenditure report. This was before the Office for Budget Responsibility revised its forecast last week on GDP growth to 0.9% for 2011.

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