ZenithOptimedia has made a small reduction to its forecast for global ad expenditure growth in 2011 to 3.6%, which is 0.5 percentage points less than the forecast it made in July. The slowdown in economic recovery in the developed markets, coupled with rising fears of double- dip recession, have caused some advertisers to trim back budget increases planned for the end of 2011, but there has beenno sign of the cancelled campaigns and sharp budget cuts that signalled the beginning of the last advertising downturn in 2008. We now expect total ad expenditure to reach US$466 billion in 2011, up from US$450 billion in 2010.
We have made a similar reduction to our growth forecast for 2012: from 5.9% to 5.3%, still a reassuringly healthy rate. 2012 is a ‘quadrennial’ year and will benefitfrom the summer Olympics in the UK, the European Football Championship in Poland and Ukraine, and the Presidential elections in the US. The growth rate will also be boosted by Japan’s recovery from the earthquake in March, which severely disrupted media and advertising for several weeks this year. We estimate that the quadrennial effect will add US$6.2 billion to the global ad market in 2012, andthe Japanese recovery another US$0.8 billion.
Our new forecast for 2013 is barely changed at 5.5%, down from 5.6% in July.
Soon after we published our last forecast in early July, financial markets fell sharply across the world, and they have been extremely volatile since then. The Dow Jones Industrial Average fell 12.7% between July 21 and August 10; the Hang Seng fell 14.7% between August 1 andAugust 9, and the Nikkei 225 fell 13.4% between August 1 and August 22. This has naturally created concern that the ad market may be headed for another downturn. However, stock market shocks are not by themselves good indicators of ad market decline. There have been many cases when stock market crashes have been followed by continued growth in ad expenditure.
ZenithOptimedia has a database ofad expenditure figures for 79 markets going back 31 years. We looked at 12 dramatic stock market crashes around the world over this period to examine their effects on ad expenditure. In some cases big declines in stock market values were followed by downturns in ad expenditure the next year, notably after the Asian financial crisis of 1997 and the bursting of the dotcom bubble in 2000.
However,the ‘Black Monday’ crash of 1987 caused no slowdown in the most-affected markets –
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Global ad expenditureforecast to grow 3.6% in 2011 after a modest slowdown in expenditure growth towards the end of the year
Growth forecast for 2012 remains a reassuring 5.3% This picture is consistent with a history of ad market growth after many previous stock
market shocks, assuming the world economy does not deteriorate dramatically Developing markets to increase their share of the global ad market from 31.0%in 2010 to
34.9% in 2013 Internet the fastest-growing medium between 2010 and 2013 (14.6% a year) Television to contribute most new ad dollars (46% of total)
in fact growth was faster in 1988 than 1987 in Canada, the UK and the US. The Asian financial crisis did not prevent ad expenditure growing in Hong Kong in 1998 (though growth was slower than in 1997), and it had no effect onadvertising in the US. And the sharp drop in the DJIA in the US after September 11 did not prevent the recovery of growth in 2002, though growth remained weak. In all, half of the stock market crashes preceded an advertising downturn, but half did not.
A crash in stock market values does not by itself mean ad expenditure is about to decline – there needs to be a causal connection between the two. This...
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