ZenithOptimedia has slightly downgraded its global advertising expenditure forecasts for 2012, calling for growth of 4.3% to US$502 billion–down from the original forecast of 4.8% growth. The media company’s forecasts for 2013 and 2014 remain unchanged at 5.3% and 6.1%, respectively.
The report also showed the rapid emergence of the so-called BRIC nations in the global advertising market. China, for example, was the world’s 10th largest advertiser in 2001 with an ad spend of US$6.6 billion, but is projected to the world’s third-largest advertiser behind only the U.S. and Japan by 2014, with an annual spend of US$48.7 billion.
Zenith is calling for Canadian ad spending to increase 3.9% to US$11.4 billion in 2012. Low interest rates continue to fuel both consumer and business spending, said Zenith.
After a “slightly better than expected” 2011–fueled primarily by a stronger performance than expected by TV–Zenith is projecting slower ad revenue growth in 2012, reflecting uncertainty about short-term economic prospects.
Conventional television finished the 2010-11 broadcast year up 1.8% over a “very strong” previous year that included the Vancouver Olympics. However, Zenith said that was followed by “slowing demand” for TV in the fall and continued softness through the spring.
Zenith is predicting a slow recovery for the country’s biggest advertising medium through 2012. While there will be a small uptick for the upcoming London Games, it likely won’t be enough to prevent an overall decline in spending on free TV from US$3.55 billion to US$3.47 billion, said Zenith. Pay TV ad revenues accounted for an estimated 35% of all TV expenditures, up from 27% five years ago.
Zenith is projecting double-digit growth for internet spending to US$3.2 billion this year. Internet spending now accounts for 25% of the total Canadian ad spend–second only to TV’s 32.4%–and could surpass TV as early as next year. According to Zenith, the internet will account for one of every three advertising dollars spent in Canada by 2014.
Video and mobile will be the primary drivers of internet spending growth, with Zenith reducing its growth forecasts for online classifieds. Demand is driving price increases for premium placements such as homepages, said Zenith, with most mass-reach homepages now sold out months in advance. However, buying is adapting to include more lower-priced inventory in an effort to control costs, while performance media and real-time bidding environments are also taking a greater share, effectively lowering CPMs, said Zenith.
While newspaper ad spend was down 6.3% to $1.97 billion in 2011, the medium enjoyed a 15% increase in spending against its digital formats. The medium has seen a steady decline in advertising revenue since hitting its historic high of US$2.65 billion in 2005. Free dailies remain one of the bright spots for the industry, said Zenith, read by more than one million commuters a day.
The magazine industry saw spending decline 2.2% to $608 million in 2011, but is expected to rebound to $618 million in 2012. Digital publishing is becoming more prevalent as tablet penetration increases.
Strong magazine brands will successfully make the transition to digital, said Zenith, but their advertising revenues will continue to be a blend of print and digital in the near term.
After a strong 2010, advertising revenues for the out-of-home industry slowed with the economy through 2011 and into the first quarter of 2012. However, Zenith predicts a slow increase through the rest of 2012, with year-over-year revenue increase of 2.5% to US$492 million and “solid” gains of 5.4% and 5.8% in 2013 and 2014, respectively.
Radio revenues increased 6% in the 2010-11 broadcast year, but the pace “slowed considerably” in 2011-12, said Zenith. The company has trimmed its growth projections for radio from 3.2% to 2%, although the start of the next broadcast year is expected to coincide with increased economic growth–leading to growth of 4.5% and further 5.5% growth for 2013-14.
