- Steve McClellan

NEW YORK IPG's Magna Global has cut its U.S. ad spending growth forecast almost in half for this year to 2 percent (for a total of $285 billion) due to worsening economic conditions.

Magna was the second major agency in as many weeks to reduce its spending forecast for 2008. Last week, Publicis Groupe's Zenith Optimedia cut its North American ad growth forecast to 3.5 percent ($195 billion total) for major media, which ZO defines as newspapers, magazines, TV, radio, cinema, outdoor and the Internet, down from its initial forecast of a little over 4 percent.

In a presentation today in New York, Robert Coen, Magna's svp, director of forecasting, cited figures that indicate "a real problem in advertising." He said that 2007 actually turned out to be significantly worse than expected, as total U.S. spending turned out to be down almost 1 percent to $280 billion. In December, based on nine months of data, he estimated a full-year gain for 2007 of 3.7 percent. "Our preliminary projection was for poor ad growth in 2007, but now it is apparent that things were even worse than many had expected at the close of last year," he said.

Ad spending in 2007 as a percent of the gross domestic product was only 2 percent, the lowest it's been since 1981, said Coen. And in the first quarter of this year a number a major categories showed spending decreases, including the auto sector, down 9 percent; computers, down 10 percent; and movies down 1 percent, said Coen. "Things for national marketers are just about bottoming out," he said.

Coen said that many countries around the world are also experiencing sluggish ad growth, although taken as a whole, overseas spending this year will be stronger than in the U.S. He forecast 6.3 percent growth overseas to $382 billion (which factors in exchange rates).

Coen's first look at 2009: U.S. spending up 3 percent to $294 million, compared to 4.6 percent growth overseas to $414 million. "Not much improvement is likely until 2010," he said.

Meanwhile emerging media will account for another $18-19 billion in 2009, with growth of about 25 percent, said Brian Weiser, svp, industry analysis at Magna. Search accounts for most of that spending -- $14 billion, up 25 percent next year, said Weiser. Social media will grow 37 percent next year to about $1.4 billion and online video will climb 45 percent to almost $800 million.

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