Global ad expenditure (including digital) will defy the economic downturn to grow 3.5% to $464bn this year, with USA, Japan and China leading the way, according to new research.
The study, from ZenithOptimedia predicted global adspend will then accelerate to $486bn in 2012, marking a 4.7% growth, despite the continuing slowdown in Europe and fears that its debt crisis will get much worse.
The firm expects ad expenditure to grow 5.2% in 2013 and 5.8% in 2014.
Eurozone crisis
Western Europe is forecast it to grow by just 2.0% in 2012, even though the Olympics is being held in the UK (which means that the coverage will be broadcast at ideal times for Western European audiences) and most of the big markets will be participating in the European Football Championship.
Assuming the economy improves by the end of next year, ZenithOptimedia forecasts 2.8% growth in 2013 and 3.3% in 2014.
The forecast assumes that GDP continues to slow in the eurozone (and the rest of Western Europe) towards the end of 2011 and the beginning 2012.
However, the economic situation is extremely uncertain and could get even worse, so ZenithOptimedia have considered the potential effects of a further deterioration of the debt crisis in Europe.
This would clearly depress advertising in the eurozone and its main trading partners, but its impact on global growth should be limited.
Looking at previous examples of countries defaulting on their debts (such as Russia in 1998 or Argentina in 2002), and the wider regional effects of this default, ZenithOptimedia estimates that a default in two eurozone countries, coupled with deeper recession in the eurozone and other Western European markets, would bring growth in Western Europe down to -4.0%, but global ad expenditure would still grow by 3.2%.
North America now looks decidedly healthier than Western Europe. In the US, industrial production and employment growth are on the rise, and foreclosures are down. Retail sales rose 7% in October, and sales on ‘Black Friday’ were up 6.6% to a record US$11.4 billion. Canada has performed strongly throughout the downturn. We forecast 3.6% growth in North American ad expenditure in 2012, strengthening to 3.7% in 2013 and 4.4% in 2014.
We predict ad expenditure to grow 3.1% in Japan next year, as it recovers from the damage caused by the earthquake and tsunami in March, which severely disrupted media and advertising for several weeks this year. After this one-off stimulus we expect Japanese growth to fall back to 1.9% in 2013 and 2.5% in 2014.
‘Quadrennial effect’
This acceleration in global expenditure is the result of the ‘quadrennial’ effect and Japan’s recovery from the effects of the earthquake in March.
Every four years the quadrennial events – the summer Olympics, the European Football Championship and the US Presidential and other elections – provide a reliable boost to the global ad market.
ZenithOptimedia expects the combination of the quadrennial effect and the Japanese recovery to add US$7 billion to ad expenditure in 2012. Without this extra stimulus, ad expenditure would grow 3.1% next year, slightly less than this year.
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