U.K.-based media research firm ZenithOptimedia expects the growth of Internet ad expenditures to outpace other media worldwide, while advertiser confidence holds steady.
According to ZenithOptimedia’s quarterly global ad forecast, over the next two years, newspapers, magazines, radio and outdoor advertising are expected to lose about 0.1 percent of share each, while cinema will hold steady. Meanwhile, TV will gain 0.1 percent of share while the Internet adds 0.5 percent, according to the forecast.
Internet advertising has accounted for 3.5 percent of display advertising revenue this year, compared with 3.2 percent in 2003. ZenithOptimedia expects it to account for 3.7 percent in 2005 and 4.0 percent in 2006. By contrast, television leads other media in 2004 with a 37.6 percent share, followed by newspapers with 29.9 percent, magazines with 13.5 percent, radio with 8.8 percent, and outdoor with 5.3 percent. Global Internet advertising leads only cinema, which holds a 0.4 percent share.
The forecast predicts that advertising expenditure growth in the U.S. will grow by 5.5 percent in 2004, and is expected to grow by 4.2 percent in 2005 and 4.8 percent in 2006. Europe will see a 4.7 percent change this year, and should grow by 4.4 percent in 2005 and 5.1 percent in 2006. While Europe’s growth is faster, it garners only 25.5 percent of worldwide display advertising revenue, compared with 45.8 percent by the U.S.
Earlier this year, ZenithOptimedia attributed this year’s growth to advertising’s enthusiasm for sports and elections.
The report shows that advertising expenditure in the major media — print, broadcast, cinema, out-of-home and the Internet — currently occupies 0.99 percent of economic output in the 57 countries monitored. This is slightly ahead of its mid-year 2004 projection of 0.98 percent, a ratio which ZenithOptimedia expects to remain stable in 2005 and 2006.
“The impression is one of broad-based, but not inflationary demand for display advertising across the world and across many categories, including retail, auto, telecoms, pharmaceutical and financial services,” the report says. “Though threatened by higher input costs and lower consumer demand, we believe good corporate profitability in developed economies principally underlies this.”
Within Europe, Germany and Italy’s recovery is strong; Spain’s ad growth is in line with its vigorous economy; and the UK and France are expected to sustain stable advertising -to-GDP ratios last seen before the telecom, technology and media bubble of the late 1990s.
The report shows that emerging markets are contributing more to the world ad market. Asia Pacific (excluding Japan) accounted for 9.7 percent of world ad spend in 2003, up from 8.1 percent in 2000. It is predicted to grow by 10.9 percent in 2006. The contribution from the “Africa/Middle East/Rest of World” category — including Russia, Turkey and several oil-producing states in the Middle East — increased from 2.4 percent in 2000 to 4.0 percent in 2003, and is expected to be 4.8 percent in 2006.
Latin America, however, is growing no faster than the global average. It accounted for 4.1 percent of world ad expenditure in 2003, down from 5.2 percent in 2000 and a peak of 6.6 percent in 1997.
“We do not expect it to gain share over our forecast period. Latin America’s economy is similarly likely only to track the world economy over the next few years, and recent history — several years of debt defaults, currency devaluations, bank collapses and political instability, advertisers — suggest it is at rather greater risk of recession,” the report states.