- Steve McClellan

As global economic volatility persists, Publicis Groupe media agency network Zenith Optimedia has downgraded for a third time its 2009 global and North American ad spending forecasts. It also reduced its global growth forecast for 2010 by a full percentage point to just 0.5 percent (to $447 billion).

The firm said its latest revisions were made after new details emerged about "how painful the first half of 2009 was for the media industry."

ZO now says global ad spending this year will drop nearly 10 percent to about $445 billion, down from the 8.5 percent decline (to $456.5 billion) that the agency had predicted in July. In April, ZO had projected a 6.9 percent falloff for 2009. Just four months earlier, in December '08, the shop forecast that worldwide outlays would be down just 0.2 percent this year.

For North America, ZO now predicts a 12.6 percent plunge for the year to $157 billion, or a little more than 2 percentage points worse than the 10.3 percent falloff (to $162.7 billion) it projected for the region three months ago. The July prediction, in turn, was worse than the 8.3 percent slide it had forecast in April, which was steeper than the 5.7 percent decline it initially released for the region back in December.

By comparison, the latest ZO revisions come after Nielsen reported earlier this month that the global advertising market appeared to be showing signs of improvement in the second quarter. According to Nielsen's Global AdView Pulse, which tracks advertising across 27 markets in Asia, North America, Europe and Africa, overall media expenditures decreased 6.8 percent for the first half of the year versus the first half of 2008. However, the second quarter closed with a more contained decline of 5.8 percent compared to a 7.9 percent decline in the first quarter (vs. the same periods of the previous year).

In September, both Nielsen and TNS reported sharp declines -- 15.4 percent and 14.3 percent, respectively -- in first-half ad spending in the U.S. (Adweek is a unit of the Nielsen Co.)

The latest ZO forecast stated, "The world's largest media owners suffered an average 13.1 percent drop in their media revenues in the first six months of the year, and this probably understates the decline suffered by the industry as a whole." The shop noted that among major media companies, only Google posted revenue growth in the first half and that Internet spending was "the only form of advertising that has continued to grow."

But Zenith also predicted that the market would "hit bottom before the end of 2009," noting some signs that the second half would be "less painful" than the first half.

As for the 2010 downgrade, Zenith said there continued to a be a "sharp disparity between developed markets, which we expect to shrink another 2.9 percent, and developing markets, which we expect to grow by a very healthy 7.8 percent."

In North America, ZO said spending would continue to drop next year, but by a smaller percentage -- 4 percent to $151 billion. However, that's a somewhat steeper drop than the agency predicted in July, when it said the region's spending would fall by just 2.4 percent to $159 billion.


Nielsen Business Media