Online ads expected to thrive in 2012

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Media services companies ZenithOptimedia and GroupM softened their independent global ad spending predictions for 2012 in forecasts released in early December. MagnaGlobal, a unit of advertising giant Interpublic, also cut its global advertising forecasts for 2011 and 2012, citing a “worsening economic outlook.” But with positive effect of quadrennial events, such as the Summer Olympics, European soccer championship and U.S. presidential elections, will there still be some winning channels?

Andrew Edgecliffe-Johnson, The Financial Times

Europe's economic crisis is dragging down the outlook for the global advertising industry, ZenithOptimedia [reported] with its second cut to media spending forecasts in five months. The Publicis-owned media services agency now expects global growth of just 4.7% in 2012, down from its October forecast of 5.3% and its July estimate of 5.9%. The figure represents an effective slowdown from the 3.6% growth in global advertising spending Zenith expects for 2011, as 2012 is a ‘quadrennial year' — when the market is boosted by both the Olympic Games and the U.S. presidential election … Under its new forecast, global advertising spending would expand from $464 [billion] this year to $486 [billion] in 2012, before picking up the pace with 5.2% growth in 2013 and another 5.8% increase in 2014.

Mary Ellen Biery, Forbes

Strategic consulting firm Kantar Media has reported that ad spending in the first half of 2011 was up 3.2%, driven by Internet media and cable television ad expenditures. But the biggest advertisers' spending stalled in the second quarter, putting ad markets more dependent on mid-sized advertisers, Kantar said. And fresh concerns about the economy have prompted some forecasters to cut estimates for 2012 ad spending despite expected boosts from political ads and the Summer Olympics. Media services firm MagnaGlobal, a division of advertising and marketing giant Interpublic Group … recently lowered its 2012 forecast for total ad spending growth to 2.9% from 4.8%, pointing to a slowdown in manufacturing, consumer spending and ongoing problems in the labor and housing markets. The firm maintained its forecast for 1.6% growth this year.

Stuart Elliott and Amy Chozick, The New York Times 

Television looks to be having a moment because marketers remain keen on buying commercial time during video programming despite the uncertain economy. Spending on TV ads internationally next year will increase 6.7% from 2011, said Vincent Létang, executive VP and director for global forecasting at the MagnaGlobal unit of Mediabrands, part of the Interpublic Group of Companies. He reduced his 2012 estimate for growth in ad spending in all media to 5% from a previous forecast that called for an increase of 6.5%. Only online ads will register a greater gain next year in worldwide ad spending than TV, at 11.2%.

Kate Holton and Paul Thomasch, Reuters UK

Global advertising growth is forecast to outpace the world economy in 2012, due to the U.S. presidential election and the London Olympics, although expectations have slipped in recent months. ZenithOptimedia predicted the global advertising market will rise by 3.5% in 2011 and by 4.7% in 2012, down from a forecast in October of 3.6% growth in 2011 and 5.3% in 2012. A second agency, MagnaGlobal, forecast 5% growth worldwide for 2012, while a third, GroupM, came in the strongest with a call for 6.4% growth next year. GroupM Futures Director Adam Smith, speaking at a UBS investor conference in New York, attributed the jump to the ‘quadrennial effect,' when the U.S. elections, European football championships and Olympics all fall in the same year. He said that was worth about 1% of extra growth in 2012.

OUR VIEW:

While the recent cuts to advertising spending forecasts may seem to cast a pall on the marketing and advertising industry, the numbers may indeed prove to be bolstered by the quadrennial events noted in media reports, and as many journalists have pointed out, advertising spending in 2012 is still expected to outperform the struggling U.S. economy. While that may not be an ideal situation, it offers some perspective on the negative predictions of these three major media services companies. It also appears that some channels, such as television advertising, online marketing and digital media are still expected to thrive.

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