Zenith Lowers Web Ad Outlook, Future Still Rosy

  |  October 19, 2009   |  Comments

Internet ad spending is the only channel expected to grow this year.

Advertising expenditures will continue their decline in most regions around the globe, but the bottom should come before the end of 2009, and Internet advertising remains a strong point, according to the latest global ad spend forecast from ZenithOptimedia.

ZenithOptimedia revised its growth forecasts for 2009 down to -9.9 percent, from the -8.5 percent it forecast in July. But the authors of the report state that the reason behind the lowered forecast has more to do with a bad first half of 2009 than what the firm expects to see during the rest of the year.

"This downgrade almost entirely relates to first-half activity. Since then improvements in economic confidence have been accompanied by positive signals from media owners that the downturn is bottoming out," the report states. "We are still confident that the second half of the year will be much less painful for the ad market than the first half, and expect the market to hit bottom before the end of 2009."

ZenithOptimedia predicts that global ad spend will reach $444.8 billion in 2009, a 9.9 percent dip from 2008's global ad spend of $493.9 billion. Recovery is expected to be slow, with 0.5 percent growth in 2010 to reach $446.9 billion and 4.3 percent in 2011 to $465.9 billion globally.

All the while, Internet ad spending is the only channel expected to grow, according to the report. ZenithOptimedia expects Internet advertising to grow by 9.2 percent this year, totaling $54.1 billion. Growth is expected to pick up a bit next year, with 11.4 percent in 2010, to $60.2 billion, and 13.8 percent in 2011, reaching $68.6 billion that year.

Most of this growth is coming from paid search in the U.S., which is expected to grow by 20 percent in 2009. Internet video is expected to grow by 19 percent, social media by 45 percent, and mobile by 69 percent.

Online display ads will grow, but much more slowly at 3 percent this year, with online classifieds growing by 2 percent.

Last year at this time, ZenithOptimedia painted a rosier picture, expecting global Internet ad spend to hit $61.7 billion in 2009 and $75.8 billion in 2010.

Internet advertising continues to grow its share of global ad spend, up from 10.2 percent of spend in 2008 to an expected 12.3 percent of spend in 2009. Internet ad spend will reach 13.7 percent share of global ad expenditure by 2010 and 14.9 percent share of global ad expenditure by 2011, according to the report.

Magazines and newspapers were the hardest-hit in 2009. Ad spending on magazines is expected to drop 19.7 percent this year, to $45.4 billion, while newspapers are forecast to dip 17.0 percent to $102.1 billion. Those two channels are also expected to continue their declines into 2010 and 2011, while TV, cinema and outdoor advertising should see a slight recovery beginning next year, and radio a slight recovery in 2011, according to the report.

ZenithOptimedia's forecast marks the second optimistic look at Internet ad spending in the past week. On Thursday, Google reported strong earnings and CEO Eric Schmidt said, "the worst of the recession is behind us."

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ABOUT THE AUTHOR

Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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