A key advertising forecaster sharply lowered its global ad spending forecast Tuesday, saying the ad market took a substantial turn for the worse in the past few months as companies tightened their belts in the face of an economic slump.
ZenithOptimedia, a unit of French advertising conglomerate Publicis Groupe, now expects a year-over-year decline of 6.9 percent to $453 billion this year, a pace that is worse than the 0.2 percent dip for 2009 it had projected in December.
Even the reliably faster-growing Asia-Pacific region is expected to see declines as trade falls off rapidly.
Ad spending in North America is now predicted to fall by 8.3 percent to $166 billion, the bulk of which is from the United States. U.S. ad spending is forecast to decline by 8.7 percent, worsening from December’s projected drop of 6.2 percent for 2009. This year’s spending levels suffer in comparison to last year, which was boosted by such special events as the Olympics and the presidential election.
Spending in Western Europe is expected to drop by 6.7 percent, with Spain showing the steepest drop at 10 percent, followed by the U.K. at 8.7 percent.
Asia-Pacific is projected to decline by 3.4 percent, as increases in China and India are offset by a slump in Japan, which comprises 38 percent of ad spending in the region. Central Europe and Latin America also should see declines.
Globally, ZenithOptimedia noted that companies are waiting until the last moment to commit to spending on advertising, which many treat as a discretionary expense. It doesn’t see a rebound in ad spending until corporate profits improve. Key is how governments around the world tackle the problem of bad debt and whether stimulus plans will jump-start growth.
In this downturn, consumers are spending more time at home, watching TV and surfing the Internet. It gives a glimpse of why online and TV ad spending should have a be tter showing.
Global ad spending on the Internet is the only medium expected to see an increase this year, up 8.6 percent to $54.3 billion. Advertisers can more easily measure their effectiveness – such as how often users click – making them more attractive than other media as budgets tighten. However, online ad spending is slowing down from last year’s 21 percent growth.
Ad spending on newspapers is expected to fall 12 percent to $107 billion, and spending on magazines is projected to decline by 11 percent to $49.1 billion.
Internet ad growth should be driven by a 9 percent increase in spending on search ads, traditionally the largest generator of online ad revenue. Classified should rise by nearly 2 percent, while traditional display ads should fall by a similar percentage.
Advertising around newer formats – such as Internet video and podcasts – are projected to rise by double-digits. But they comprise merely 12 percent of the online ad market, whic h itself was 10 percent of the overall ad market in 2008.
Television ads, while projected to fall by 5.5 percent to $173 billion, remains one of the better performers among the different media. ZenithOptimedia said advertisers that slash their ad budgets across the board tend to cut TV last.
Auto ad spending remains grimly weak with some pockets of optimism, such as in France and Germany where government incentives boosted auto sales and thus, advertising.
Ad spending from the financial sector has fallen off sharply, but retail and packaged goods are holding up as they advertise good deals to cash-strapped shoppers.
Apple and Google Face UK Investigation Into Mobile Browser Dominance
Apple and Google aren't giving consumers a genuine choice of mobile web browsers, a British watchdog said Friday in a report that recommends they face an investigation under new U.K. digital rules taking effect next year.
The Competition and Markets Authority took aim at Apple, saying the iPhone maker's tactics hold back innovation by stopping rivals from giving users new features like faster webpage loading. Apple does this by restricting progressive web apps, which don't need to be downloaded from an app store and aren't subject to app store commissions, the report said.
"This technology is not able to fully take off on iOS devices," the watchdog said in a provisional report on its investigation into mobile browsers that it opened after an initial study concluded that Apple and Google effectively have a chokehold on "mobile ecosystems."
The CMA's report also found that Apple and Google manipulate the choices given to mobile phone users to make their own browsers "the clearest or easiest option."
And it said that the a revenue-sharing deal between the two U.S. Big Tech companies "significantly reduces their financial incentives" to compete in mobile browsers on Apple's iOS operating system for iPhones.
Both companies said they will "engage constructively" with the CMA.
Apple said it disagreed with the findings and said it was concerned that the recommendations would undermine user privacy and security.
Google said the openness of its Android mobile operating system "has helped to expand choice, reduce prices and democratize access to smartphones and apps" and that it's "committed to open platforms that empower consumers."
It's the latest move by regulators on both sides of the Atlantic to crack down on the... Read More