Online drives Carat's revised ad spend forecast

Share this content:

Global advertising expenditure is expected to grow 6 percent this year, up from international media services independent Carat's previous forecast of 5.7 percent made in June 2006.

The agency also upped its global advertising forecast for next year to 5.8 percent growth, from the 5.5 percent previously forecasted.

This optimism is due to an increase in advertising and marketing spending by brands across all categories, Carat said. The acceptance of online media in most marketing departments - mirroring consumer behavior - is a key driver of advertising growth.

Ad expenditure in the United States is expected to grow from 4 percent in 2005 to 5.4 percent this year and down slightly to 5.2 percent in 2007. For full year-on-year percent growth by region, click here. One-off events like the midterm elections helped boost television ad growth this year. TV is the No. 1 media vehicle.

Also, out-of-home and cinema are growing as more U.S. advertisers are attracted by the captive audiences delivered. Growth in newspapers is flat, while magazines and radio have low single-digit growth.

The main driver of U.S. advertising expenditure growth, per Carat's revised forecast, is online media, at 20 percent.

Carat revised its Asia-Pacific regional forecast to reflect the increased advertising spending in Japan, China, India and the Philippines.

The agency, which is part of Aegis Group PLC, forecasts ad expenditure in the region will grow by 7.6 percent this year as opposed to the previously forecasted 6.4 percent. The forecast for next year was revised from a 6.8 percent growth rate to 7.4 percent.

Japan's emergence from a long deflationary period has led almost to a doubling of expenditure on PC-based and mobile Internet. Television and magazines also are expected to grow in the mid-single digits, making up for the decline in radio and out-of-home spending.

China also is expected to contribute to the advertising expenditure increase, at a projected 20 percent growth rate for this year and next. India, the Philippines and Indonesia, too, are forecasted to continue their double-digit growth for this year and 2007.

Carat said growth in Europe is stable and in line with its June 2006 forecasts, at 4.4 percent in 2006 and 4.1 percent next year. Some European markets have seen lower ad spending, while others have seen increases.

France, for example, is expected to grow 4.8 percent this year, much higher than the anticipated 2.7 percent forecast earlier. Increased online advertising from the telecommunications, financial services, and travel and tourism categories have contributed to this year's growth.

For next year, though, Carat has forecasted a slower French growth, at 2 percent. The French presidential election is in the first half of the year. That said, deregulation of TV advertising by retailers next year is expected to boost demand for broadcast inventory.

Advertising spending in Germany is expected to grow only 1.9 percent this year, versus the 2.1 percent originally forecasted. The World Cup helped. The growth projection for next year is 1.5 percent, unchanged from the previous forecast.

Italy's growth this year, at 3.4 percent, was thanks to the Turin Olympic Games. Ad spending is anticipated at 2.6 percent for next year, down from the previous 3.1 percent projection.

Spain continues its run as one of Europe's strongest markets. Television, new digital entrants and a growing newspaper market - particularly the number of free titles - and the new formats in radio led to a Carat forecast of 4.6 percent for this year and 4 percent in 2007.

This year has been tough for the British advertising market. Commercial TV underperformed when compared to years past in terms of audience delivery and ad revenue.

Carat expects British TV ad revenue will fall by nearly 7 percent this year. Demand for newspapers, especially regional titles, was weak, too.

So the 1 percent growth this year is primarily due to the Internet. Total online expenditure is forecast to grow by 40 percent this year, edging magazine display advertising for the first time in British media history.

Online seems to be the common thread through all Carat forecasts. The agency expects online ad expenditure will jump 27 percent this year, from the previously forecasted 25 percent.

This increase amounts to a 5.2 percent share of global advertising expenditure this year, up from 4.3 percent in 2005. Next year's online share is expected to grow to 5.7 percent of all global ad spending.


Next Article in Marketing Strategy

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above