Natural disasters and political upheaval have led to GroupM downgrading its global ad spending forecasts in a report released Wednesday morning. Its 2011 forecast is now 4.8% growth, down from the previously predicted 5.8%.
In Canada, the report shows that the outlook isn’t as glum as elsewhere. It reveals that total media ad spend in 2010 was $12.8 billion (a 14% increase over 2009). In 2011, that number is predicted to grow to $13.6 billion (a 6% increase over 2010).
In its biannual report This Year, Next Year, which spans 70 countries, GroupM’s adjusted forecast states that 2011 global advertising spending in measured media would reach $506 billion. That’s an increase of 4.8% from 2010 spending of $483 billion.
GroupM futures director Adam Smith said in release that the rare scale of Japan’s earthquake and tsunami made a measurable impact on global advertising. GroupM’s 2011 forecast for Japan, said Smith, fell from an anticipated 3% growth to a 5% decrease. This is a difference of 0.8%, or $4 billion, of global spending.
He also commented on the political instability in the Middle East, which he said led to an estimated $1.2 billion drop in regional ad spending this year. Smith said GroupM now predicts ad investment in the Middle East and Africa will only increase by 2.5%, to $16.5 billion, this year. That’s half the rate it reached in 2009 during the worldwide recession.
And, moving forward, Smith said GroupM predicts the potential annual growth rate in the area will drop to roughly 7% for the next few years. This is in contrast to its usually “exuberant double-digit performance,” said Smith.
On a more positive note, and thanks in large part to an expected hike in spending on the summer Olympics and next year’s U.S. political campaigns and elections, the forecast estimated that global ad spending would hit $540.3 billion in 2012 – a 6.8% increase over this year.
In the U.S., GroupM predicts ad spending will see a 4.2% jump and reach $154 billion in 2012, driven largely by that year’s presidential election, said GroupM chief investment officer Rino Scanzoni. For 2011, the predicted spending figure is $148 billion (a 3.8% increase over last year).
“The elections make heavy use of local TV and radio, so national media may well find 2012 is slower-going in any case,” said Scanzoni. “As for the summer Olympics, the broadcasts will attract substantial advertising investment, but the majority of this will be displaced rather than new funds.”
On the digital front, the report stated that measured digital advertising will make up 17% of global advertising this year – a point ahead of GroupM’s forecast in December. Growing at an estimated 15% to 16% annually, the sector is expected to surpass $100 billion worldwide next year.
The This Year, Next Year study is part of a forecasting series on media and marketing. Results are compiled from data from GroupM parent company WPP and its worldwide resources in advertising, market research, PR and specialist communications.
What does the GroupM report say about Canada?
• TV is strong, but newspapers reign. After spending $3.76B on TV advertising in 2010, advertisers will pay $4.01B this year and $4.09B next. Newspapers took in $4B in ad revenue in 2010, and are likely to bring in $4.18B this year and $4.2B next.
• TV spending was up a whopping 21% in 2010 after falling 8.5% in the dark recession-clouded days of 2009. It’s predicted to rise a more modest 6.8% this year and just 2% in 2012.
• Magazine was the only media that didn’t enjoy a bounce-back in 2010. After falling 14.7% in 2009, consumer magazines were off another 2% in 2010 and are projected to be flat this year. For business books, the drop was 13.8% in 2009, 3% last year and will likely fall another 3% this year.
• In 2004, Canadian marketers spent just $364 million on digital advertising; that rose to just over $2 billion last year and should hit $2.365 billion in 2011 (about 17.4% of all media spend).
• Procter & Gamble remains Canada’s biggest advertiser, spending $211 million in 2010, up 27% from the year before. GM was in second place spending $151 million, up 68%, followed by the Federal Government ($126 million, +4%) and Rogers Communications ($124 million, +8%).
