In Depth

Middle East, North Africa Turmoil Burdens Ad-Spending Forecast -- ZenithOptimedia Outlook Keeps Overall Outlay on Par With April Estimate

By Alexandra Bruell
Advertising Age

Publicis Groupe's ZenithOptimedia expects global ad expenditure to reach $471 billion in 2011, a 4.1% boost from 2010 that's on par with a 4.2% increase it predicted in April, but still down from the 4.6% increase it predicted in December.

The consistency is likely welcome as marketers continue to face political turmoil in the Middle East, public debt in Europe and high oil prices. ZenithOptimedia is less optimistic about the Middle East and North Africa, forecasting a 12.1% decline in ad spending for the region this year, a sharp drop from the 0.1% increase it predicted in April as turmoil spreads and advertisers continue to pull out of Bahrain, Egypt and Oman. A recent Group M report alternatively predicted that the advertising investment in the Middle East and Africa would increase 2.5% in 2011.

ZenithOptimedia, however, is more positive about economic recovery from the earthquake in Japan. In its forecast, and in a recent interview with Ad Age, it said the earthquake in Japan has been less disruptive than initially feared, lifting an expected decline of 4.1% to a decline of 2.4%. That outlook for Japan, with help from upgrades for China and Malaysia, drove the forecast for Asia Pacific up to a 5.9% increase in spending from the 4.6% reported in April.

Group M takes a different position on the impact of the crisis in Japan -- a 5% decrease in ad expenditure in the region due to longer-term fallout. That outlook contributed to a decline in its recent global forecast -- a 4.8% increase in global ad spending compared to a 5.8% boost it predicted in its December report.

Developing markets, defined as everywhere outside North America, Western Europe and Japan, will experience the fastest growth, according to the forecast, increasing their share of the global ad market from 30.7% in 2010 to 35.1% in 2013.

For the U.S., ZenithOptimedia projects a 2.1% increase in ad spending in 2011 to $165 billion, down from the previous estimate of a 2.5% increase. "It will take several years for ad spending to reach the level it was at in 2008. Fortunately, most of the large financial, retail and automotive spenders have returned to the marketplace," the forecast stated. (Group M predicted a 3.8% increase in spending over 2010, to $148 billion.)

TV is absorbing the most U.S. dollars, moving from network to cable, for which the Publicis network expects to see a 10% increase in spend. In the U.S., internet is growing fastest, with an expected 12.6% boost in 2011. Other U.S. media predictions include: cinema (6.0%), with the largest decreases in newspapers (-8.5%), business publications (-4.0%) and consumer magazines (-1.0%).

Globally, the network expects internet to shoot up 14.2% a year, display being the fastest-growing segment with an expected 6.4% increase, driven mainly by online video and social media.