NEW YORK For the second time this year, Publicis Groupe media agency network Zenith Optimedia has downgraded its 2009 global and North American ad spending forecasts.

The firm said its latest revisions were made after estimates for Q1 ad expenditures were found to be too high.

ZO now says global ad spending this year will drop 8.5 percent to $456.5 billion. In April, ZO had predicted a 6.9 percent falloff for 2009. Just four months earlier, in December '08, the shop projected that worldwide outlays would be down just 0.2 percent this year.

For North America, ZO now predicts a 10.3 percent drop in '09 ad spending to $162.7 billion, worse than the 8.3 percent slide it had forecast in April, which in turn was steeper than the 5.7 percent decline it initially forecast for the region back in December.

"Faced with extreme uncertainty, advertisers in most sectors planned for the worst and cut their costs in anticipation of steep drops in revenue," the agency said. "In uncertain times, advertising is often treated as a discretionary expense and cut early, despite much research that shows companies maintaining their ad expenditure in a recession come out of it stronger than those that do not."

The agency is also predicting what it calls a "mild global recovery" for 2010, when spending is expected to rebound with a 1.6 percent increase to almost $464 billion. Spending will continue to rise in 2011, up 4.3 percent to $484 billion, the agency said.

North America, however, will face a third straight year of spending declines, ZO believes, down 2.4 percent to $159 billion in 2010. The numbers will finally turn positive for the region in 2011, when ZO says spending will rise 1.5 percent to $161 billion.

ZO is the second big shop to recently predict a mild global recovery for next year. Two weeks ago, WPP's GroupM also said the outlook for 2010 was looking better, but still in the negative column with a 1.4 percent decline to $411 billion. GroupM sees ad spending in 2010 being worse in North America, with a 6.1 percent drop to $151 billion following a 4.2 percent decline this year.

By medium, ZO projects Internet ad spending will grow 10 percent globally in 2009, ahead of its 8.6 percent prediction in April. By 2011, it expects Internet spending to account for 15 percent of all ad outlays, up from 10.5 percent in 2008. Most of that growth will come from paid search ads, the shop said. In the U.S., ZO predicts search will grow 20 percent in 2009, while the traditional online display category rises 3 percent and online classified ads increase 1.8 percent. Microsoft's launch of its new search engine -- Bing -- should spur further innovation in search, it said.
 
The Internet is the only medium ZO expects to grow in 2009. Among the other media, it predicts that television, cinema and outdoor will shrink by 7.1 percent, 4.8 percent and 7 percent, respectively.
 
Newspaper ad expenditures will drop 14.7 percent in 2009, while spending in magazines will drop 16.7 percent.