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GroupM update predicts global ad spending to fall 4.4 percent in 2009

31 March, 2009

U.S. Spending Expected to Decline 4.3 Percent In ’09 and Almost 7 Percent Next Year

Global advertising spending in measured media is expected to drop 4.4 percent to $425 billion in 2009 compared to 2008 when spending was up 3 percent, according to a revised, interim forecast report from GroupM.

In the U.S. spending in 2009 is expected to fall by almost the same amount — 4.3 percent — in 2009 but tumble 6.8 percent in 2010.

The revised GroupM forecast was reported by GroupM Futures Director Adam Smith in London and GroupM Chief Investment Officer Rino Scanzoni in New York.

In December 2008, GroupM’s twice-yearly “This Year, Next Year” report predicted that measured media spending in 2009 would drop 0.2 percent to $458 billion globally and decline 3 percent in the U.S. to $157 billion.

Smith pointed out that when adjusted for consumer price inflation (CPI), the global 4.4 percent drop equates to a fall in real terms of 7.0 percent. This contrasts with prospective global economic growth of perhaps zero this year, and follows a real fall of 1.6 percent in 2008 global advertising. “The 2008/2009 period is now a more serious advertising recession in scale, duration, and relative to the global economy, than the extraordinary 5.1 percent real-terms post-dotcom global advertising correction of 2001,” Smith said.

In the U.S., Scanzoni cautioned that 2010 was expected to show a more severe decline as a result of marketing budgets that were devised in the throes of the current recession. He also said the stimulus package provided by the U.S. government is not expected to have an immediate positive impact on ad spending because it does little to drive consumer spending in the face of high unemployment, a weak housing sector, and a resurgence of commodity inflation in the short run.

“GroupM is the largest single buyer of media in the world and our figures are based on our own proprietary revenue data base across media,” Scanzoni pointed out. “Any optimism we feel about the U.S. this year is expected to be mitigated by a further spending decrease in 2010.”

Western Europe faces a 6.7 percent fall this year (8.5 percent real) where Germany is so far proving the most resilient regional advertising market.

The forecast for spending in China dropped to 3.2 percent growth this year (a real fall of 1.1 percent), from the 13 percent we forecast in December. The decline is attributed to consumer retrenchment and a credit crunch in retail distribution, which government stimulus might alleviate.

GroupM will publish its first full forecast of 2010 ad spending in the June edition of “This Year, Next Year,” which 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.

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.

Adam Smith
Office: 44 (0)20 79 69 40 83 

John Wolfe
Office: 212-297-7160 / Cell: 914-659-8663 

Acrobat Document groupm_pressrelease_globalspend_mar09_guid2224ee2b.pdf

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