Global Advertising Spending Expected to Drop 0.2% in 2009

Global advertising spending in measured media is expected to drop 0.2 percent to $458 billion in 2009 compared to the previous year when spending was up 2.6 percent, according to a new study from GroupM.

The projected decline is the first retreat in global advertising since the 3 percent fall recorded in 2001 after 2000’s extraordinary, dotcom-driven ad growth of 15 percent.

The report also predicted that ad spending in the U.S. will fall 3 percent to $157 billion in 2009 following a 0.3 percent increase to $162 billion in 2008.

The study, “This Year, Next Year” is part of GroupM’s media and marketing forecasting series drawn from data supplied by holding company WPP’s worldwide resources in advertising, public relations, market research, and specialist communications.

Highlights of the study were presented today at the UBS Media Conference in New York by GroupM Futures Director Adam Smith, who oversees all of GroupM’s “This Year, Next Year” reports.

“Advertisers are scrutinizing every penny,” said Smith. “The automotive and financial services categories have obviously seen weakness across 2008, and retail will be under pressure as we move beyond its busiest fourth-quarter into 2009. Among our own client base we are not seeing wholesale cancellations, but we are seeing migration from expensive and less-tried-and-true media to value and certainty.”

Smith identified internet ad spending as the only significant growth area, but noted that despite a projected 5 percent increase in 2009, spending is still down compared to an expected 16 percent growth this year. He added that the world’s other leading internet economy, the U.K., mirrored U.S. projections with rates of 4 percent in 2009 compared to 22 percent in 2008. Worldwide, internet ad growth is predicted to slow from 22 percent in 2008 to 10 percent in 2009, representing $5 billion growth to reach $59 billion or 13 percent of measured media investment.

“We do not expect an ad collapse in 2009, but nor do we expect the sudden improvement of the last two cycles,” said Smith. “Consumer retrenchment is simply too deep. However, the good news is that some support for recovery is already in place.”

For example, Smith pointed out that gasoline prices have recently dropped more than $2 per gallon, resulting in significant savings for consumers. Also, he said prices for raw materials prices have fallen, thereby freeing up funds for other purposes such as marketing.

“Brands which were strong enough to raise prices when commodities spiked are even betterplaced,” Smith said. “Most of all, the strategy-minded advertiser knows recessions are a rare and brief opportunity to build share at bargain prices.”

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