Ad spending to stabilize in 2010, online to lead the way

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Advertising spending forecasts for next year represent the first glimmer of hope that the ad market will finally stabilize after an unprecedented downturn. Three leading industry prognosticators weighed in with predictions for next year: ZenithOptimedia said advertising spending will grow globally by 0.9% in 2010 to nearly $448 billion; GroupM predicted similar growth (0.8%) to $448 billion; and Magna Global had a more optimistic prediction of a 6% global advertising increase to $380 billion.

“Global ad outlook is a 'V' in China and other faster-growing markets, with the mature countries looking at a flat-to-negative 2010, pending revived marketing from auto and finance in particular,” said Adam Smith, GroupM futures director. “Sooner or later, brands will need rebuilding. Advertisers the world over are wondering if consumers have suddenly become more resistant to advertising. They have not, but they're just a little reluctant to spend.”

The 2010 outlook stands in stark contrast to predictions for this year's totals. All three companies estimate that this year will go down in the record books, in a negative sense: Zenith puts the final number at a 10.2% decline in global ad spend; GroupM see global advertising dipping 6.6% this year; and Magna estimates a revenue decline of 15%.

Internet advertising is the only medium with growth expected this year, and it is the channel that will lead growth in 2010, according to all three. In addition, within all media, the online industry will generate more than $60 billion in advertising revenues next year, and $99 billion by 2015, according to Magna.

Smith explained online's health can be attributed to its alignment with traditional direct marketing principles.

“Just like in the old days, direct marketing used to be the safe haven because it provides quick measurable results, online has assumed that safe haven role now,” he said. “Paid search is basically half of online and you only pay for results.”

ZenithOptimedia cited similar numbers online: $60.4 billion for next year. It also predicted that search will continue to lead all online advertising.

“Paid search is the engine of Internet growth,” the company said in a statement.

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