2009 ad forecasts: It’s all about television

Michael Hedges December 10, 2008

For the first time since the dot com bubble burst next years’ global ad spending will shrink, say the forecasters. Developing markets will, however, continue to develop. By 2010 or 2011 the realignment of media markets could be well underway.

Zenith Optimedia (ZO), M Group and Magna Global’s venerable ad forecaster Bob Coen presented their best and worst estimates in New York. The world’s media can take what they want from the prognostications but one clear reality looms large: advertising doesn’t resist economics.  For Western European and North American media, it’s a state of fear not without reason.

ZO, which issues quarterly forecasts, now sees a global downturn in ad spending for 2009. Three months ago ZO was still holding out for near term growth. That is gone.

The greatest down shift, say the forecasters, is in the print sector, and most of that in North America. Global print advertising will fall 3.8% and, by appearances, to the precipice by US newspaper ad spending.

ZO forecasts 2009 ad growth in the US 5.7% lower, Western Europe 1% lower. The downturn, they say, started in Q3. It continues.

Ad spending in Germany will be 6.1% lower, says ZO. Television spending will be down 3.8%. Web ad spending will be up, but only 1.2%. “The era of rapid growth in Web advertising is over,” said ZO Germany’s Michael Bohn.

Ad spending in the Middle East and North Africa region will grow by 11.2% but Latin America will expand by 14.9%. Brazil, itself, will see 30% growth. Ad spending in Eastern Europe including Russia will grow only 1.5% instead of the previously predicted12.7%. Asia remains a tiger; China’s ad growth rate is expected to be 9%, India 13%. M Group forecasts slightly lower ad spending growth in China due to decreasing interest from multi-national spenders. ZO says 89% of ad spending growth to 2011 will come from developing regions.

Noting the volatility of developing markets, ZO offered two forecasts for Russia, optimistic and less optimistic. The optimistic forecast predicts 5% ad spending growth, television and Web ad spending up, others down. The pessimistic forecast shows 17.5% decline. M Group said ad demand in Russia will fall 11%.

"Television remains the cheapest media in terms of the contact value of the contact and the internet, besides being cheap, is the best targeted,” said ZO Moscow’s Leila Davydova.

Internet ad spending will rise 18% in 2009 to 9.5% of all ad spending, strikingly higher than any other medium but also slower than earlier projections. Growth in North America will be 18%, says ZO, and 12% in Western Europe. By 2011 Web advertising will lead magazines by 5.2% and newspapers by 5.6%. The 2008 projection still shows Web ad spending lagging print by more than 15%.

Ad spending on television will be, essentially, stagnant; growing only 0.5%.

The most important shift of all, viewing the forecasters’ reports and thinking globally, is the inevitably of ad spending on television overtaking print advertising by 2010 and 2011. The explosion of new digital television channels worldwide is certainly driving more viewing, aided by recession afflicted consumers staying home. The increased number of TV channels also drives ad rates down, allowing more advertisers to get on TV and spend less on other media. Ad buyers, with decades of experience, know that no medium builds brands – at the right price – better than television.

And with more eyeballs glued to the tube advertisers and ad agencies have every incentive to go to television. Every other medium suffers, the Web less so. General interest print media suffers more, not necessarily because people are seeing print media less. Long term, high value ad contracts – the staple of newspaper revenue – are a thing of the past.

Ad buyers now benchmark ad rates not on traditional media’s cost per thousand but on the Web’s click-through rate. A lot of economic bubbles are bursting now but basic ad rates are falling faster than sales of HumVees, except of course in Kazakhstan.  It’s classic over-supply. But nobody’s brave enough to talk about ‘less is more’…yet.

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