GroupM: Global ad recovery to begin in 2010; not so in U.S.

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Global ad spend is expected to drop 6.6% to $445 billion in 2009 with a mild growth of 0.8% now expected in 2010 to $448 billion, revised up from a 1.4% fall in the previous 70-country forecast report from GroupM.


The BRIIC nations (Brazil, Russia, India, Indonesia and China) are expected to lead the recovery while ad spending in the U.S. and Western Europe will probably lag behind, according to the report.

The study, “This Year, Next Year” is part of GroupM’s media and marketing forecasting series drawn from data supplied by WPP’s worldwide resources in advertising, PR, market research, and specialist communications.  It was released by GroupM Futures Director Adam Smith and GroupM Chief Investment Officer Rino Scanzoni at the UBS Global Media and Communications Conference.
 
“We expect the BRIC and Next 11 countries to underwrite ad growth with a pronounced V-shaped recovery which is already underway in China,” said Smith. “In the US and many mature economies, deleveraging and sluggish job creation will likely postpone recovery until 2011.”

Ad spend in the US is expected to fall 8.0% this year followed by an anticipated 4.3% drop in 2010, according to the report.  Those figures compare to an average 8.4% decline in 2009 followed by a 2.8% drop in 2010 in the G7 nations
(Canada, France, Germany, Italy, Japan, the U.K., and the U.S.).

Smith stressed that global prospects for ad recovery in 2010 are improving: “There are signs from around the world of confidence returning to the financial services and automotive sectors which have been hit hardest, though this has yet to translate into bigger marketing appropriations. Fast Moving Consumer Goods, personal care and telecommunications are widely cited to have sustained their advertising through the recession, but marketers everywhere, particularly in the U.S. and Western Europe, are looking for further savings and more value from media markets in 2010.”

GroupM’s new long-range model expects global ad revenue growth to return to annual growth in the range 6%-7% from 2011-2014, around a point ahead of expected nominal global GDP growth.

Media USD m, current prices
 
2008
2009f
2010f
 
 
NORTH AMERICA
169,007
155,797
149,640
yoy %
-1.9
-7.8
-4.0
LATIN AMERICA
22,712
24,307
26,860
yoy %
10.6
7.0
10.5
WESTERN EUROPE
122,121
106,520
104,848
yoy %
-1.7
-12.8
-1.6
EMERGING EUROPE
21,220
17,364
18,455
yoy %
12.5
-18.2
6.3
ASIA-PACIFIC (all)
127,329
126,818
133,583
yoy %
5.8
-0.4
5.3
NORTH ASIA
47,740
50,202
55,388
yoy %
18.1
5.2
10.3
ASEAN
9,845
10,480
11,694
yoy %
10.2
6.5
11.6
MIDDLE EAST & AFRICA
13,780
13,802
14,774
yoy %
20.9
0.2
7.0
WORLD
476,169
444,609
448,159
yoy %
1.8
-6.6
0.8

Media yoy% adjusted for CPI      
 
2008
2009f
2010f
 
 
NORTH AMERICA
-5.4
-7.5
-5.5
LATIN AMERICA
3.6
1.5
5.9
WESTERN EUROPE
-4.7
-13.2
-2.5
EMERGING EUROPE
2.8
-21.7
-0.1
ASIA-PACIFIC (all)
1.2
-1.1
4.1
NORTH ASIA
12.0
4.7
9.4
ASEAN
1.0
3.1
6.8
MIDDLE EAST & AFRICA
9.6
-5.1
1.5
WORLD
-2.5
-7.2
-1.0