U.S. ad slide assumes
global proportions

Zenith: Hurt felt in Europe and Asia through '01
   
By Gabriel Spitzer
    Anyone waiting for some good news about the advertising economy had better get comfortable. 
   It may be a while still.
   According to a new report released by Zenith Media, global media spending will increase by just 1.4 percent in 2001, which when adjusted for inflation will actually amount to a decline of 1.4 percent in real dollars, compared to a year ago.
   That would make it the first year-to-year decrease since 1993, on the tail end of a recession.
    The U.S., home to 43 percent of the world’s ad spending, looks to be leading the ugly global trend.
   North America, led by the U.S., is the only region in the world predicted to post negative growth this year, down 2 percent, or 5.1 percent in inflation-adjusted dollars.
    The top 10 U.S. advertisers cut back an average 11.8 percent in the first quarter of 2001, compared to 2000.
    Of those top 10, only three—AOL Time Warner, DaimlerChrysler and GlaxoSmithKline—actually increased their spending from the first quarter of 2000.
   Zenith ties the weak U.S. ad economy to the broader economic issues of consumer confidence, uncertainty on Wall Street, and decreasing corporate profits.
   By far the worst-off medium in the U.S. is local radio, projected to finish the year off 6 percent from 2000.
    Also taking the brunt of the slowdown in the U.S. is, not surprisingly, network television.
    Based on the seemingly interminable upfronts, Zenith predicts a 3 percent decline in advertising revenue for the networks.
   Even syndication is not expected to fare that poorly. Zenith predicts it will remain basically flat, with a 1 percent increase.
   Cable could come out of 2001 with a relatively good year, growing 6 percent, largely on the strength of new, upstart networks. Zenith trimmed its earlier prediction of a 9 percent increase.
   Zenith also backed off on earlier predictions that internet advertising would grow by 33 percent this year, projecting instead a 25 percent increase—still by far the largest of any medium.
   Elsewhere in the world, European and Asia-Pacific countries are also expected to post weak gains this year, but none as drastic as the U.S.
   Zenith predicts that Europe will finish 2001 up 3.6 percent, or 1.4 percent after inflation. Asia-Pacific should pick up by 3.4 percent, or 2.8 in inflation-adjusted figures.
   The U.K., whose fortunes are bound up inextricably with those of the U.S., will also post an overall decrease in ad spending this year, down 0.5 percent, or 2.3 percent in inflation-adjusted prices.
   Radio, with 5 percent growth, outdoor, with 7 percent growth, and the internet, expected to grow by a third, all look relatively strong in the British Isles.
   Newspapers and magazines are expected to end 2001 basically flat in the U.K., while television will plummet 4.7 percent.
    On the continent, the one bright spot is Germany.
   Ad spending in Germany is projected to swell by 5.3 percent, or 4.4 percent after inflation.
   Again, Zenith cites broader economic factors behind the relatively encouraging ad outlook. Unemployment in Germany remains low, and private consumption is likely to continue growing at a brisk clip.
   All major German media are expected to make gains, led by radio with 9.6 percent, and outdoor, with 6.1 percent.
   Japan, despite a troubled economy, is expected to grow by 4.7 percent, or 5.4 percent after inflation.
   That growth comes on the back of a strong internet advertising sector, which after more than doubling last year, is expected to increase by 66.9 percent in 2001.
   Zenith still predicts a reversal of fortunes by next year, with global ad spending in 2002 projected to increase by 5.9 percent, or 3.4 percent in inflation-adjusted dollars.
    Zenith has the U.S. clocking a 4.7 percent increase in 2002, with Europe set to grow 5.9 percent and Asia Pacific by 6.1 percent.
   Latin America will be the world’s hottest advertising region by 2002, with predicted growth of 9.1 percent.

 

Year-to-Year change 
in global advertising expenditures
Current and constant prices
 

2000 v 1999

2001 v 2000

2002 v 2001

2003 v 2002
 

Curr Prices

Const Prices

Curr Prices

Const Prices

Curr Prices

 Const Prices

Curr Prices

Const Prices

North Amer.

11.0

7.4

-1.7

-4.8

4.7

2.3

4.5

2.1

USA

11.3

7.6

-2.0

-5.1

4.7

2.2

4.5

2.0

Canada

5.5

2.7

5.1

3.1

4.9

2.8

5.3

3.2

Europe

9.5

6.8

3/6

1.4

5.9

3.9

5.8

3.6

Asia
-Pacific

11.1

9.6

3.4

2.8

6.1

5.2

4.3

2.8

Latin Amer.

12.1

-

5.4

-

9.7

-

11.3

-

Rest of World

14.6

-

9.0

-

12.5

-

11.7

-

Total

10.8

7.8

1.4

-1.4

5.9

3.4

5.5

2.7
Source: Zenith Media
Figures include spending on television, print, radio, cinema and outdoor. Constant-price growth rates not available for Latin America and Rest of World.



U.S. advertising expenditures
in US $ million
Yr.

Total

News
papers

Mags

TV

Radio

Outdoor

Internet

99

136,833

43,697

15,593

49,797

18,581

4,565

4,600

00

153,110

48,700

17,700

54,981

20,819

4,910

6,000

01

151,701

48,213

16,992

54,525

19,659

4,812

7,500

02

159,868

50,413

18,348

57,032

20,116

5,053

8,906

03

168,409

52,613

19,794

59,296

20,585

5,433

10,688
Source: Zenith Media

 

 

Year-to-year change in U.S. ad expenditures
current prices and constant prices
Yrs.

Total

News
papers

Mags

TV

Radio

Outdoor

Internet

00 v 99

11.9/
6.0

11.4
7.8

13.5
9.8

10.4
6.8

12.0
8.4

7.6
4.0

30.4
26.1

01 v 00

-0.9/
-2.4

-1.0
-4.2

-4.0
-7.1

-0.8
-4.0

-5.6
-8.6

-2.0
-5.1

25.0
21.0

02 v 01

5.4/
2.5

4.6
2.1

8.0
5.4

4.6
2.1

2.3
-0.1

5.0
2.5

18.7
16.0

03 v 02

5.3/
2.4

4.4
1.9

7.9
5.4

4.0
1.5

2.3
-0.1

7.5
5.0

20.0
17.2
Source: Zenith Media

 

July 2, 2001 © 2001 Media Life

-Elizabeth White is a staff writer for Media Life.


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