Business

Saturday August 8, 2009

ZenithOptimedia forecasts growth of 1.6% next year and 4.3% in 2011


PETALING JAYA: Global advertising expenditure (adex) will bounce back to make a V-shaped recovery, growing 1.6% next year and 4.3% in 2011 against an expected contraction of 8.5% this year.

ZenithOptimedia Worldwide, one of the world’s leading global media services agencies, revealed this trend in its latest global adex forecasts for the next three years.

Gerald Miranda, chief executive officer of Zenith Media Malaysia, said the forecasts showed that while some advertisers had curtailed their advertising expenditure in the current downturn, many had not done so.

Of the 79 markets covered in the survey, 25 are still growing and these include major markets like India and China.

Spending in China is forecast to grow 5.4% this year, overtaking Britain to become the world’s fourth largest advertising market, while India is expected to grow 7.7% in adex and overtake Norway, Mexico and the Netherlands to become the 14th largest.

“Malaysia has also held up well this recession with total spending in the first half of 2009 just a shade lower at -0.5% compared with the same period last year,” Miranda said.

In Malaysia, magazines registered the biggest drop (-11%) followed by cinema (-10%) and newspapers (-5%).

All the other monitored media in the country recorded growth rates with TV up 6%, radio 10%, Internet 12%, outdoor 16% and point-of-sale advertising 7%.

The top five sectors in percentage growth were pharmaceuticals (+26%), travel and tourism (+23%), education (+21%), retail (+20%) and non-alcoholic beverages (+20%).

The top three sectors in percentage decline were office and business equipment (-50%), alcoholic beverages (-30%) and finance (-23%).

“There is much research to support the fact that companies maintaining their advertising expenditure in a recession come out of it stronger than those that do not,” said Miranda.

He noted that apart from increased spending as the global economy came out of a recession, adex growth next year would also be aided by the Winter Olympics, FIFA World Cup and the US mid-term elections.

On the global front, ZenithOptimedia Worldwide predicts a recovery in advertising spending of +1.6% in 2010 as 62 of the 79 markets experience growth.

The agency expected North America adex to shrink a further 2.4% in 2010 after shrinking 3.7% in 2008 and 10.3% in 2009.

It forecast a stagnant 0.2% growth rate in Western Europe in 2010 following a 1.1% decline in 2008 and a 9.2% decline in 2009.

But it predicted that 2009 would be the only year of decline for Asia Pacific, Central and Eastern Europe, and Africa/Middle East/rest of world, while Latin America would come to a halt rather than go into reverse.

These regions would return to growth in 2010, followed by North America and Western Europe in 2011.

In 2011, it predicted all but five markets – Finland, Greece, the Netherlands, Norway and Taiwan – would grow as global adex recovery built up to +4.3%.

The Internet, according to the agency, is the only medium expected to grow in 2009 globally. It is forecast to grow 10.1% this year and by 2011 it is expected to account for 15.1% of all advertising expenditure, up from 10.5% in 2008.

Among the other media, TV, cinema and outdoor are forecast to decline by less than the market as a whole, shrinking by 7.1%, 4.8% and 7% respectively.

Newspaper adex worldwide was predicted to shrink 14.7% in 2009 and to continue contracting for the rest of the forecast period. In 2011, it was forecast to be 22.7% below its 2007 peak.

Magazines faced an even tougher time this year as luxury advertisers cut back severely, so a 16.7% decline in magazine advertising was forecast in 2009.

But their long-term prospects were brighter than those of newspapers, since the experience of reading a magazine was less easy to replicate on the Internet.

The return to growth in 2010 and 2011 would, however, bring no end to the challenges faced by many big media owners.

“New technologies are reducing entry costs, providing a lot of new competition for the established players,” Miranda said.

“TV networks will be threatened by digital channels and video websites. In addition, newspaper websites are increasingly having to contend with bloggers and radio stations with podcasts.

“Competition for consumers’ attention, and the advertising revenue that comes with it, will only get more intense as the world economy recovers.”

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