Revising downwards its earlier forecast of a 6.6% global ad spend growth for 2008, ZenithOptimedia has said that an overall slowdown will mean a lower growth at 4.3% for the year. “Though the bank failures will have a fairly small direct effect on advertising expenditure since financial advertising contributes only about 4% of global advertising expenditure, fears for the future will cause consumers to cut their spending, while companies carefully inspect their budgets to find cost savings,” the report said.
Unlike in the periods leading up to the last two advertising downturns, advertisers have not been increasing their budgets ahead of economic growth over the last few years, the study said.
In the years preceding the downturns of 1990 and 2000, ad expenditure grew well ahead of the general economy, rising as a proportion of GDP and peaking at 1.07% in 1989 and 1.05$ in 2000. This left the advertising market vulnerable to sharp corrections when the economy slowed.
In recent years, however, advertising expenditure has roughly tracked the economy, and has remained between 0.92-0.93% of GDP. There is no bubble in ad spend to burst, which is why ZO’s study expects global ad spend to slow in 2008 and 2009 rather than to go into reverse gear.