Keys to the kingdom
ZenithOptimedia has cut its '08 and '09 ad spend projections for the second time.
The Publicis media arm predicts US ad spend in '08 will shrink by 3.8% and fall 6.2% in '09, down significantly from its October revision — when it forecast 1.6% growth in '08 and 0.7% growth in '09.
While ad spend overall will suffer in '09, Zenith believes a recovery will begin in the second half of the year, with mild year-on-year growth compared to the difficult second half of 2008, Media Life writes (via MediaBuyerPlanner). Global ad spend will slip 0.2%; online and outdoor will continue to be bright spots in the gloom.
GroupM predicts US ad spend will rise 0.3% in '08, then fall by 3% in '09. In '01, the ad economy fell 6% in the US, after growing 12% the previous year. It grew 1.7% in '02.
Newspapers will continue to see the most difficult times, falling 12% this year and 15% next year, according to Zenith. TV, radio and magazines will also see negative growth, with local TV, which relies on auto ads for about 25% of their income, to slip 12% in 2009.
The ad industry’s struggles are further compounded by travails in the auto industry, the largest category of advertiser, and a segment that typically spends nearly $20 billion a year on ads, reports The New York Times. As automakers face their worst sales figures in decades, their reduction in ad spend fuels the downward revisions of forecasters. "A lot of dealer spending is linked directly to sales," stated CEO Tim Jones for North America at ZenithOptimedia. "If they’re not selling cars, they cut spending."
The auto industry's retrenching could compel the ad industry to rethink itself, says Chris Foster, chief executive for North American ops at Fallon Worldwide, part of the SFF Group division of Publicis. Foster points out that the downsizing of agency-sustaining types of business like autos will "force agencies to do great work - or die."
This could mean there are opportunities for start-ups, particularly those more comfortable with social media. Acquisition opportunities, for those with capital, are also likely to abound.
Meanwhile, outdoor, including cinema, and online will continue to grow. Internet growth will be 21.1% in 2008 — a figure that wasn't downgraded in this report. In 2009, it will grow 18.1%, per Zenith. GroupM predicts internet ad spending will jump 16% this year and just 5% in 2009.
Last week, Merrill Lynch predicted a 4.2% drop in US ad spend in '08 and a 5% drop in '09. Global ad spend will grow 0.4% this year, followed by a 1.6% slip in 2009, in large part due to a 15% drop in auto spend next year.