ZenithOptimedia downgrades 2011 ad spend forecast

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ZenithOptimedia softened its global and US ad spending predictions for this year in forecasts released July 13. The media services company predicted that US advertisers will increase spending 2.1% to $165 billion this year, down from its April forecasted growth of 2.5%. The firm also predicted global ad spending will grow 4.1% to $471 billion in 2011, down 1% from its April predictions.

Jonathan Barnard, head of forecasting at ZenithOptimedia, said the predictions were downgraded because of weak economic activity in Western Europe and North America. Continued fear of a default in Greece added to lower economic confidence in the world economy, said Barnard.

“High commodity prices have made consumers wary of spending…companies have looked very carefully at spending on all lines of cost space,” he said. “Overall, the projections are less optimistic than they were three months ago, but they are less gloomy than I thought they may have been given the economic news over the last three months.”

A healthy year for the advertising industry would include 6% global growth and 4% growth in the US, he said.

The firm also projected that US direct mail ad spending will increase by 2.9% in both 2011 and 2012 and by 2% in 2013.  

“There are obviously pressures on the direct mail industry, such as postage rate increases,” said Barnard. “But it's a media where it's fairly obvious if it's working or not. As long as it's working, advertisers will continue to spend on it.”

Zenith forecasted that US Internet ad spending will grow 12.6%, 15.8% and 16.1% in the next three years, respectively. US ad spend for online video will grow by 22% in 2011, 26% in 2012 and 25% in 2013.

Mobile will be the fastest-growing ad medium, the report predicted. The medium will see US ad spending increases of 45%, 47% and 49% in the next three years, respectively, according to the forecast.

“Mobile's growth is a function of the fact that it's still a small component of overall spend,” said Barnard. “It represents $844 million in the US. That's a small fraction of the country's $165 billion in ad spending.”

Telemarketing in the US will see 2% annual growth in each of the next three years, according to the report.

ZenithOptimedia predicted that network TV will end the year flat, a downgrade from the previous forecast's 3% growth prediction, and see a 1% drop in 2012 despite the Olympic Games. The firm made no prediction for 2013.

Zenith predicted that cable TV ad spending will grow 10% this year, 9% next year, and 10% in 2013. It also forecasted that US consumer magazine ad spending will drop 1% this year and 2% in both 2012 and 2013. The firm said US newspaper ad spending will decrease by 8.5% in 2011 and 8% in both 2012 and 2013.

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