Global ad spending to increase 4.8% : GroupM

World events such as Japan’s devastating natural disasters and the political upheaval in the Middle East have taken a toll on global advertising spending, leading GroupM to decrease its forecast for 2011 ad growth from 5.8 percent to 4.8 percent.

The revised spending forecast was made in GroupM’s biannual worldwide report, “This Year, Next Year,” which predicted that globally, 2011 advertising spending in measured media would hit $506 billion, a 4.8 percent increase over 2010 spending of $483 billion.

The 70-country forecast also predicted that ad spending in 2012 would reach $540.3 billion, a 6.8 percent increase over 2011, sparked largely by anticipated spending on the summer Olympics and the 2012 U.S. political campaigns and elections.

The study is part of GroupM’s media and marketing forecasting series drawn from data supplied by parent company WPP’s worldwide resources in advertising, public relations, market research, and specialist communications. It was released today by GroupM Futures Director Adam Smith in London and GroupM Chief Investment Officer Rino Scanzoni in New York.

“It’s highly unusual for natural disasters to measurably impact the totality of global advertising,” said Smith. “However, the earthquake and subsequent tsunami in Japan was of this rare scale.” He added that GroupM’s 2011 forecast for Japan dropped from an anticipated three percent growth to a five percent decrease, a difference of $4 billion, or 0.8 percent of global spending.

Smith also said that unrest in the Middle East caused ad spending in the region to lose an estimated $1.2 billion in 2011.

“We now expect advertising investment in the Middle East and Africa to grow only 2.5 percent in 2011 (to $16.5 billion), half the rate it achieved even in the global recession of 2009,” Smith said. “We further expect its potential annual growth rate to be reduced to around 7 percent annually for a few years instead of its typically exuberant double-digit performance.”

In the U.S., 2011 spending is expected to hit $148 billion, a 3.8 percent increase over 2010, Scanzoni said. He added that 2012 U.S. ad spending should reach $154 billion for a 4.2 percent hike.

“Without the election, US ad growth in 2012 would probably be slower than what we are predicting for 2011,” Scanzoni said. “The elections make heavy use of local TV and radio, so national media may well find 2012 is slower-going in any case. As for the summer Olympics, the broadcasts will attract substantial advertising investment, but the majority of this will be displaced rather than new funds.”

The report also predicted that measured digital advertising will account for 17 percent of global advertising in 2011, a full point ahead of GroupM’s previous forecast in December 2010. The sector is growing at an estimated 15-16 percent annually and will exceed $100 billion worldwide in 2012.

“Digital advertising spending accounts for 20 percent and more of measured advertising in countries where it is most developed, but it still has real growth potential even in those nations,” Smith said. “A recurring theme from such countries is the commercial utility of behavioral targeting and web video, even among traditional ‘brand’ or ‘awareness’ advertisers.”

The full “This Year, Next Year” worldwide report is now available upon request. For copies, please notify the media contacts listed below.

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