GroupM forecast says global ad spending to fall 0.2 percent in 2009

8 December, 2008


Study Says U.S. Spending Could Drop 3 Percent to $157 Billion


NEW YORK – Global advertising spending in measured media is expected to drop 0.2 percent to $458 billion in 2009 compared to the previous year when spending was up 2.6 percent, according to a new study from GroupM.

The projected decline is the first retreat in global advertising since the 3 percent fall recorded in 2001 after 2000's extraordinary, dotcom-driven ad growth of 15 percent.

The report also predicted that ad spending in the U.S. will fall 3 percent to $157 billion in 2009 following a 0.3 percent increase to $162 billion in 2008.

The study, “This Year, Next Year” is part of GroupM's media and marketing forecasting series drawn from data supplied by holding company WPP's worldwide resources in advertising, public relations, market research, and specialist communications.

Highlights of the study were presented today at the UBS Media Conference in New York by GroupM Futures Director Adam Smith, who oversees all of GroupM’s “This Year, Next Year” reports.

“Advertisers are scrutinizing every penny,” said Smith. “The automotive and financial services categories have obviously seen weakness across 2008, and retail will be under pressure as we move beyond its busiest fourth-quarter into 2009. Among our own client base we are not seeing wholesale cancellations, but we are seeing migration from expensive and less-tried-and-true media to value and certainty.”

Smith identified internet ad spending as the only significant growth area, but noted that despite a projected 5 percent increase in 2009, spending is still down compared to an expected 16 percent growth this year. He added that the world’s other leading internet economy, the U.K., mirrored U.S. projections with rates of 4 percent in 2009 compared to 22 percent in 2008. Worldwide, internet ad growth is predicted to slow from 22 percent in 2008 to 10 percent in 2009, representing $5 billion growth to reach $59 billion or 13 percent of measured media investment.

“We do not expect an ad collapse in 2009, but nor do we expect the sudden improvement of the last two cycles,” said Smith. “Consumer retrenchment is simply too deep. However, the good news is that some support for recovery is already in place.”

For example, Smith pointed out that gasoline prices have recently dropped more than $2 per gallon, resulting in significant savings for consumers. Also, he said prices for raw materials prices have fallen, thereby freeing up funds for other purposes such as marketing.

“Brands which were strong enough to raise prices when commodities spiked are even better-placed,” Smith said. “Most of all, the strategy-minded advertiser knows recessions are a rare and brief opportunity to build share at bargain prices.”

The full “This Year, Next Year” report, which contains forecast figures for almost 50 nations worldwide, including the BRIC countries (Brazil, Russia, India and China) will be released December 12. For copies, please notify the media contacts listed below.
 

ABOUT GROUPM

GroupM is the leading global media investment management operation. It serves as the parent company to WPP media agencies including MAXUS, MediaCom, Mediaedge:cia and Mindshare. Our primary purpose is to maximize the performance of WPP’s media communications agencies on behalf of our clients, our shareholders and our people by operating as a parent and collaborator in performance-enhancing activities such as trading, content creation, sports, digital, finance, proprietary tool development and other business-critical capabilities. The agencies that comprise GroupM are all global operations in their own right with leading market positions. The focus of GroupM is the intelligent application of physical and intellectual scale to benefit trading, innovation, and new communication services, to bring competitive advantage to our clients and our companies.

MEDIA CONTACT
Adam Smith
GroupM
Office: 44 (0)20 79 69 40 83
Email: adam.smith@groupm.com

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