Carat just issued new forecasts for global advertising expenditures in 2009 and 2010.
Carat's revised prediction for worldwide expenditure this year is a fall of 9.8%. The downward revision of 4.0 percentage points (from -5.8% in March 2009) is due to significant reduction of forecasts in all regions, with the exception of Asia Pacific where the 2009 forecast has been revised marginally upwards to -0.3%.
Although global spending for 2009 has been cut back considerably, predictions remain for a slight return to growth in 2010, at 1.0% globally, driven by much more stable conditions in the West and recovery in developing markets, particularly China.
Year on year
Growth at current prices (%)
Commenting on the forecasts, Jerry Buhlmann, CEO of Aegis Media, said: "These significant revisions are not unexpected in the context of the recent volatility of the market, and represent a cautious attitude towards adspend this year, most significantly in the US and Europe.
"China remains the most resilient of the major economies, and we have revised our estimate upwards since March to 6.9% for 2009. However, even in China, we have noticed advertisers proceeding cautiously, and adjusting spend on a quarterly basis.
"Despite the reduction to forecasts for 2009, we still believe that 2010 will see growth, albeit very modest. We expect the market to bottom out in North America and Europe, and to improve further in developing markets. Even after that initial recovery, however, the global advertising market will still be below its absolute 2006 level."
In the US, advertising spend in the first half of the year was well below that in 2008. Previously committed activity was scaled back while significant incremental spending has not materialized. The current full year projection for 2009 is -16.3% (March 2009 forecast of -9.8%) with significant recovery now not expected until the second half of 2010 at the earliest. All major media categories are tracking below last year.
The gloomy outlook in the US and Western Europe is not repeated in Asia Pacific and Latin America, where revisions since March have been less severe. In China, our forecast for 2009 has been revised upwards from 4.6% to 6.9%, but even here advertisers are proceeding with caution and adjusting spend on a quarterly basis. The only region forecasting positive growth this year is Latin America (0.5%).
Relatively Strong Online Advertising and TV
Online advertising remains the only area of the media that will see growth this year, estimated at 1.0% globally. Online growth remains in double digits in the markets of Asia-Pacific and Central and Eastern Europe this year. However, low single digit growth in Western Europe and a decline in the US have led to a downward revision in forecasts. Online growth should continue to make significant progress in 2010. Of the sectors, Television and Cinema continue to hold up best, reflecting the relative popularity of cinema and home entertainment in the downturn.
Cowen, a financial analyst and brokerage house, also recently revealed data about US online advertising expenditures forecasts. Cowen expects a financial 5% decline in the U.S. this year and an, almost assured, increase in 2010. Citing anecdotal conversations with agencies, the financial analyst finds some signs of optimism regarding advertisers’ interest in spending more on search and display, paidcontent.org reports. From the looks of those conversations, it looks like portals will continue to struggle for scraps, as the bulk of online ad spending will go towards Facebook, search, and content websites such as WSJ.com, WebMD and CBS Interactive. Portals’ may decline between 13- and 19 percent, as display dollars for that segment fell between 11- and 20 percent in Q209.