Technology | Media | Telecommunications

Saturday, April 25, 2009

Advertising: the Growth was Wishful Thinking


If you already tune out and ignore most forms of advertising, then clearly you're not alone. With the exception of a couple of under-developed regions of the globe, most traditional advertisers have acknowledged that fact.

eMarketer reports that the reality has convinced those who were previously hopeful for some sort of a miracle turnaround -- apparently it was wishful thinking. Three major advertising agency buyers around the world are moving beyond their prior denial, and are now forecasting more severe declines in their customer ad spending.

Last month, GroupM, a division of WPP, predicted a 4.4 percent decline in global ad spending for 2009.

That forecast slide was exceeded by one from Carat Insight, owned by Aegis, which put the worldwide ad spending decline for 2009 at 5.8 percent.

ZenithOptimedia, the media-buying unit of Publicis, the world's fourth-largest advertising group, has boldly gone one step further than it's competitors -- by candidly predicting the largest decline.

Last December, ZenithOptimedia had expected merely a 0.2 percent decline for 2009, but the firm's revisited figures now predict nearly a 7 percent decline in worldwide ad spending this year.

In fact, ZenithOptimedia now sees ad spending dropping 11 percent for magazines, 10 percent for radio, 5.5 percent for television, and throughout the worldwide legacy mass-media spectrum.

"A lot of markets we were expecting to show at least modest growth this year are clearly going to be down substantially," Jonathan Barnard of ZenithOptimedia told the Financial Times.

Amid the unrelenting advertising sector gloom, however, there's a temporary upside. Internet advertising around the world continues to grow, projected to be up 8.6 percent this year -- to reach 12.1 percent of overall global ad spending.

However, I believe that online ad spending will suffer a similar fate, as advertisers discover more effective digital marketing methods that can positively impact revenue growth. This topic is sure to be on the agenda of the upcoming Monaco Media Forum, later this year.