Zenith Optimedia Cuts Ad Spending Forecast Again

NEW YORK For the second time in three months, Publicis Groupe’s Zenith Optimedia has downgraded its 2008 ad spending forecast for North America and Western Europe. Even so, the growth rate for the rest of the world is higher than the agency previously forecast.

ZO cited the ongoing credit crunch and concerns about inflation — driven by higher energy and commodity prices — as motivating the downgrades.

Growth in North America is now projected at 3.5 percent to almost $195 billion for major media, which ZO defines as newspapers, magazines, TV, radio, cinema, outdoor and the Internet. In March, ZO had projected 3.7 percent growth for the region, which represented a downgrade from the initial 4 percent-plus that the shop had originally forecast in December 2007.

Ad spending in Western Europe will climb 3.7 percent to $124.5 billion for major media, ZO said, down from the 3.9 percent the company forecast in March and the 4 percent-plus it had predicted last December.

Outside of those two regions, ZO said growth would average almost 12 percent, up from the 11 percent forecast in March. The company cited domestic consumption in developing market economies as the primary reason for the improved forecast.

“The net result is that we predict the world ad market will grow 6.6 percent this year, fractionally more than the 6.5 percent we predicted in March and well above the 5.2 percent rate at which it has grown over the last 10 years,” ZO concluded.

The agency also believes worldwide Internet advertising will surge almost 27 percent this year — and break through the 10-percent-share barrier “a year earlier than we predicted just three months ago.”

The shop said Western advertisers were shifting more dollars to the Internet amid concerns about the economic outlook, as both the online video and paid search segments continue to grow significantly.

Print, TV and radio are all losing share to the Internet, but newspapers are clearly suffering the most. Newspapers’ share of the global ad market fell close to 8 percentage points from 1997-2007 and will drop another 3.5 points by 2010, ZO predicted.