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Forecast for 08 Is OK, but Only Online Shines


ZenithOptimedia's 6.7% Global Growth Prediction Inflated by Presidential Election, Olympics, Soccer

It's a good thing working in the media business is fun, because the forthcoming ad-spending forecast from ZenithOptimedia offers many reminders that it's also plenty difficult.

Marketers will pour $195 billion into North American advertising channels next year, 4.1% more than in 2007, according to the ZenithOptimedia forecast, scheduled for release Dec. 3. Ad spending worldwide will near $486 billion in 2008 for a 6.7% gain.

That all sounds great except for the broader forces, rising costs and economic uncertainty, that accompany it. ZenithOptimedia's new report pegs U.S. ad-spending growth this year at just 2.5%, well short of the 3.7% expansion it foresaw as recently as last summer. That 2.5% is also way under inflation, which ran at an annual rate of 3.6% for the first 10 months of this year.

What's more, even 6.7% growth globally isn't quite so grand when you consider that it takes into account what WPP chief Martin Sorrell has in the past called a "quadrennial kick," in which ad-boosting events such as the Olympics, a presidential election and a European soccer championship take place in the same year.

Internet safety
It's only online, of course, that the media business looks both fun and easy. Worldwide internet ad spending will climb to $44.6 billion from about $36 billion, increasing its share of the market to 9.4% from 8.1%.

"We predict internet advertising to pass three milestones over the next three years," ZenithOptimedia's forecast said. "We expect it to overtake radio advertising in 2008; to attain a double-digit share of global advertising in 2009; and to overtake magazine advertising in 2010, with 11.5% of total ad spend."

Various media sectors will see only slightly less dramatic shifts. Technically, to be sure, everyone will win in the worldwide market next year -- by collecting more ad revenue than they did this year.

Bad news
But if you toil in newspapers, magazines or radio, ZenithOptimedia expects you to lose share. Even TV, still the biggest and most powerful way to reach a lot of customers at once, is projected to essentially hold its ground on the global stage, taking a 37.9% slice in 2008 after getting 37.7% in 2007. Outdoor, for its part, will expand its stake to 5.7% from 5.6%, and cinema will improve to 0.5% from 0.4%.

In the U.S., network TV is facing still unquantifiable risk from the writers strike, according to Tim Jones, CEO of ZenithOptimedia Americas. "In 1988, it lasted 22 weeks, which is clearly a long time," he said. "The three major networks lost 6% of their audience to cable. And that was never recaptured."

The area that's perhaps the most interesting and difficult to watch going into 2008, however, is event marketing and experiential media, Mr. Jones said. "Everyone talks about migration to the internet, but experiential-type media are seeing huge increases -- that are difficult to capture."

The industry, however, can be grateful in 2008 for a few gifts. "Look ahead to 2008, and it's definitely a quadrennial year, and the Olympics and Euro 2008 football tournament and the presidential elections may well be disguising some underlying performance," Mr. Jones said. "That's a key thing to say. We're all carefully watching the economy. If it wasn't for those things, which actually account for a considerable amount of investment, we would be about flat year to year in growth."

Quadrennial year
Quadrennial effects or no, if growth is your game, the forecast calls more than ever for a current passport.

"North America used to be half of advertising expenditures," Mr. Jones said. "We're seeing its share drop a full point every year at this point. That's being made up for everywhere east of Eastern Europe. Look at the multinationals and where their investments are focused: the Russias, Chinas and Indias of the world. That's true of our business and media vendor companies as well."

Between now and 2010, according to the forecast, the 10 fastest-growing ad markets will be Kazakhstan in the pole position followed by Belarus, Serbia, Egypt, Russia, Moldova, Indonesia, the United Arab Emirates, Ukraine and what the agency refers to as "Pan Arab."



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