ZenithOptimedia (ZO) has upgraded their forecasts once again – in light of strong growth in online video ads and local search – and now expect the internet to attract 8.6% of global adspend in 2008 and 9.4% in 2009 (The internet will grow six times faster than traditional media between 2006 and 2009 and increase its share of the ad market from 6.1% to 9.4%). Just three months ago ZO predicted it would attract 8.6% in 2009. ZO predicts online adspend will grow by 82% between 2006 and 2009, while the rest of the ad market grows by 13%.
ZO predicts the Olympic Games will attract 3 billion in additional ad expenditure in 2008, nearly 1 billion of it in China. The Presidential election and the Euro 2008 football championship will contribute another 3 billion between them. ZO issued a slight downward revision in adspend forecasts for the Americas, but all other regions are up, including signs of recovery in Germany and the UK.
A fifth of all Chinese ad expenditure will be on Olympics-related advertising in 2008. Across the rest of the world ZO expects the Beijing Olympics to generate just over 2 billion in extra ad expenditure in 2008, taking the total to 3 billion. ZO also expects the US elections and Euro 2008 to generate another 3 billion between them. Together these events will boost global adspend growth from 5.5% in 2007 to 6.4%, comfortably above the 5.1% annual growth rate the ad market has averaged for the last 10 years.
China will become the fifth-largest ad market in the world this year, overtaking Italy. It will still be only two thirds the size of the fourth largest – the UK – but at its current rate of growth (averaging 18% a year to the UK's 5%) it won't be too long before it takes fourth place. ZO forecasts China's ad expenditure to grow by 3.7 billion (25%) in 2008, more than any other market in the world except the US – which they expect to grow by only twice as much, despite the fact it is more than ten times the size.
ZO reduced their forecasts for the US slightly after continued weakness in network TV and trade mags. Latin America is also down slightly – owing to a softening of exports and domestic demand in Mexico – but is still growing at about twice its long-term average rate.
ZO upgraded forecasts for all other regions. ZO now expects Western Europe to outperform North America throughout 2007 to 2009, after nine years of underperformance. ZO is particularly encouraged by signs of recovery in Germany and the UK. The German ad market expanded by 4% in 2006 – this was its fastest growth since 2000, and its first growth at above the rate of inflation. The UK's television market appears to have reached the bottom of its trough in mid-2007 and should exhibit modest growth in Q3, though it will be flat at best for the full year.
As ZO mentioned in April, all of the fastest-growing markets are in the Middle East and Central & Eastern Europe. Media markets in both regions are maturing rapidly, and advertising is playing a growing role in local economies. High, if erratic, oil prices are providing a boost to several countries in both regions. ZO expects growth in their Africa/Middle East/Rest of World region (which is mainly driven by the Middle East) and in Central & Eastern Europe to remain comfortably in double digits over their forecast period.