Most if not all the big major year-end media forecasts are out, and while the numbers vary from one to the next, the message is pretty much the same: This ad recovery is going slowly and unevenly, with some media not expected to ever fully recover, notably print.
And if 2009 has been the worst year in this ad downturn, and the worst in memory for many, 2010 doesn't look all that much better. Meaningful recovery won't come until 2011 and 2012.
The chief problem for the U.S. media economy, of course, is that consumers aren't spending, and that's led advertisers to hold back on their spending.
But also bedeviling things is the shift from more expensive traditional media to less-expensive digital media, allowing marketers to achieve their goals at far less cost.
Globally, recovery is coming sooner to the developing markets, most notably China. The developed economies--the U.S. and Western Europe--are lagging and will continue to lag. That's hardly news. What is news is that it's probably coming sooner than forecasters thought a few months back.
In their revised outlooks, three top forecasters, Brian Wieser of Magna, Adam Smith of Group M, and Steve King of ZenithOptimedia, see the U.S. ad economy finishing 2009 down to varying degrees: King by 12.9 percent, Wieser by 16 percent, and Smith by 7.8 percent (his figures also include Canada).
For 2010, the outlook is slightly better. King sees minus 2.6 percent growth, Smith minus 4 percent and Wieser a plus 1 percent.
Below is a brief look at the three forecasts:
Magna
In his analysis, Wieser points to the devastating economic setbacks of 2009 following the economic meltdown, and their effect on real estate, financial services, and the automotive and retail sectors, along with the lasting effects on consumer credit that resulted.
As a result, he notes that gross domestic production may have contracted by as much as 3 percent, the steepest decline since the end of World War II. That all led to a downturn in ad spending.
But Wieser notes, "A period of growth will soon be upon us, although not until the later part of 2010, and likely muted compared to previous economic recoveries." He's forecasting flat 2010 followed by an average 2 percent growth from 2011 to 2016 in core advertising revenues.
Group M
In its global forecast, Group M is offering a slightly brighter outlook. It sees total spending falling 6.6 percent this year, to $445 billion, followed by 0.8 percent growth in 2010, to $448 billion. That's up from a decline of 1.4 percent the global buying giant forecast some months ago.
The recovery will be led by the fast-growing media economy of Brazil, Russia, India, Indonesia and China.
As for the U.S. and other developed economies, Smith is quoted as saying: "Deleveraging and sluggish job creation will likely postpone recovery until 2011.”
The so-called G7 countries--Canada, France, Germany, Italy, Japan, the UK and the U.S.--will see spending decline by 8.4 percent this year and 2.8 percent next year.
ZenithOptimedia
ZenithOptimedia's forecast for global ad spending marks its most optimistic take in the past 18 months. The agency has raised its outlook for media spending to growth of 0.9 percent for 2010 and is forecasting that growth will hit 5 percent by 2012, improving each of the next three years.
Says the report, "We estimate that global ad expenditure will have dropped 10.2 percent over the course of 2009. It is normal for ad expenditure to exaggerate general economic trends: when the economy shrinks, ad expenditure shrinks faster, and by more. The corollary to this is that when recovery is complete, we can expect the ad market to outperform the economy as a whole."
The agency still expects a 2.6 percent decline next year in the United States, compared to a 12.9 percent dip this year. Positive growth will resume in 2011, which will rise 1.6 percent over 2010, and 2012, which will be up 2.9 percent.
ZenithOptimedia says that the internet will be the only medium to grow worldwide this year, with paid search driving a 9 percent overall increase. The web's share of ad expenditures will continue to increase over the next three years, going from 12.4 percent this year to 16.2 percent in 2012.
"We expect the internet to overtake newspapers to become the world’s second-largest advertising medium by the time we are halfway through the next decade," the report predicts.
By contrast, newspapers and magazines have suffered the most. "By 2012 newspapers and magazines will be 26 percent and 28 percent respectively below the peak levels they reached in 2007," the report says.
