December 4, 2007 FOR IMMEDIATE RELEASE
GROUPM FORECAST SAYS U.S. AD SPENDING TO INCREASE 3.7% TO $168.6 BILLION IN 2008, UP FROM PROJECTED 2.8% HIKE THIS YEAR Worldwide spending expected to go up 7% to $479 billion next year following 6% increase in 2007
Advertising spending in U.S. measured media is expected to show almost a four percent gain in 2008 compared to the previous year, when spending was up about three percent, according to a new study from GroupM. The forecast is unchanged from the company’s previous projections earlier this year.
The study, “This Year, Next Year” is part of GroupM's media and marketing forecasting series drawn from data supplied by holding company WPP's worldwide resources in advertising, public relations, market research, and specialist communications. The study included an examination of all major media and took into account a wide variety of factors including the subprime mortgage credit crisis and the current strike by the Writers’ Guild of America.
The report said U.S. advertising spending is expected to show a 3.7 percent increase to $168.6 billion in 2008. At the same time, spending in 2007 is expected to come in at 2.8 percent higher than in the previous year. Worldwide spending, meanwhile, is expected to go up 7 percent to $479 billion in 2008 following an anticipated 6 percent increase in 2007.
GroupM Futures Director Adam Smith, who oversees all “This Year, Next Year” reports, identified television and the internet as the primary engines of global ad growth with 50 percent and 30 percent, respectively, of additional new investment in
2008. He also said spending on marketing services such as sponsorship and public relations is growing at a faster rate than it is for traditional advertising. Smith also reported that three percent of global ad investment is expected to shift from developed to emerging economies in 2008, the largest such shift recorded.
“The main geographic contributors to growth next year are predicted to be China, with 21 percent of all new money, and Russia and Brazil with each contributing six percent,” said Smith. He added that India will account for three percent and the U.S. remains the second-highest contributor at 20 percent. “This eastward shift is a form of 'advertising arbitrage' in which traditional media dollars are moving to the place where they can do the most good,” Smith said.
The report also predicted the following: • Next year’s spending expectations largely reflect the Olympics and the U.S. election. It is anticipated that the Games will bring $1 billion in ad spending to national TV and $200-$300 million to local broadcast. The election is even more important to local broadcast and is expected to inject nearly $2 billion in 2008 before facing a tough adjustment in 2009. •
Internet ad spending is expected to exceed 10 percent of global ad investment in 2008 for the first time ever, and search will comprise 65-70 percent measured online advertising in 2008, up from 50% in 2005. Another first, in one country—Sweden—online advertising is expected to exceed TV The U.K. and Denmark are likely to be the next in line.
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The Writers’ Guild of America strike is not expected to impact U.S. ad spending. It is anticipated that spending will follow the viewing audience and shift from network to cable and possibly spill over into other media if demand causes inflation in cable. However, a prolonged strike could delay pilots and thus impact the 2008 upfront marketplace. An upfront delay would add to uncertainty and nervousness, but might force broadcasters into innovation with new formats.
•
Advertising spending in newspapers is expected to continue to suffer and new softness is already evident in some large categories such as automotive,
airlines, and retail. But the continued heavy loss of classified advertising to the internet continues to do the most serious damage.
Media, USD, m NORTH AMERICA yoy % USA yoy % LATIN AMERICA yoy % WESTERN EUROPE yoy % EMERGING EUROPE yoy % ASIA-PACIFIC (all) yoy % NORTH ASIA yoy % ASEAN yoy % MIDDLE EAST & AFRICA yoy % WORLD yoy %
2005 160,752 4.2 150,773 4.2 12,107 29.1 110,988 4.4 13,967 20.9 91,202 6.9 29,216 12.5 7,410 10.1 8,385 11.8 397,401 6.2
2006 169,029 5.1 158,091 4.9 14,379 18.8 116,360 4.8 17,110 22.5 96,713 6.0 32,810 12.3 7,999 7.9 9,630 14.8 423,222 6.5
2007f 174,116 3.0 162,585 2.8 16,586 15.3 121,979 4.8 20,559 20.2 104,370 7.9 37,087 13.0 8,715 9.0 10,982 14.0 448,592 6.0
2008f 180,961 3.9 168,594 3.7 19,287 16.3 127,171 4.3 24,227 17.8 114,828 10.0 44,022 18.7 9,529 9.4 12,417 13.1 478,891 6.8
Marketing, USD, m WORLD PR Market Research Direct & specialist Healthcare Rest-of-world sponsorship Total sponsorship Total YOY% change PR Market Research Direct & specialist Healthcare Sponsorship Total
2005
2006
2007f
2008f
5,896 23,002 226,866 6,193 1,600 30,500 292,458
6,530 24,473 240,271 6,484 1,700 33,670 311,428
7,076 25,963 254,433 6,800 1,800 37,730 332,002
7,631 27,532 268,022 7,200 2,000 43,500 353,884
7 7 6 4 9 6.3
11 6 6 5 10 6.5
8 6 6 5 12 6.6
8 6 5 6 15 6.6
For further information about the report please e-mail adam.smith@groupm.com
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