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The economic winds have truly changed directions. With the plummeting green buck, the relative importance of advertising in the United States has grown dismal since peaking in 2000.
According to Universal McCann Senior VP and Director for Forecasting Robert Coen, the combination of practically flat local marketers’ increases and the meager gains in spending by the larger marketers has resulted in very slow growth in advertising across the entire nation.
As the economy took a dive in 2000, and the Internet bubble broke in 2001, advertising’s share went downhill. Ad share began to move back upward in 2004, but a sustained advertising recovery failed to appear in 2005, 2006, and again in 2007.
Traditional advertising suffered from a considerable decline while online advertising showed a slight growth last year.
On a positive note, the Super Bowl, that a highly desired advertising vehicle, may generate more ad spending. Likewise, the Beijing Summer Olympics may lead to extra spending for special Olympic tie-ins, and the presidential election advertising will definitely bring the ad spend figures up.
As such, the expected improved growth in 2008 is dependent on these unique events. Such growth is not expected to continue in 2009. A gain of $294.4B is now expected for US advertising this year.
In other parts of the world, emerging markets such as China, India and Russia have been experiencing exceptional economic growth. However, Germany, Japan and other large countries are suffering from a snail-pace ad growth. Overall, growth in these countries look more promising. The outlook sees a rise of 5.3 percent in 2008 to $359.5B. The year 2008 may bring an expected rise of 4.6 percent to $653.9B.
For the last three years, ad spending for the most important categories have grown in a very modest pace. Significant improvements in competitive ad spending are not expected soon.
Universal McCann forecasts worldwide advertising growth of 4.6 percent in 2008 (assuming no change in exchange rates). According to Coen, the immediate future of advertising is “presently confronted with change, evolution, opportunities and uncertainties. The climate in the US and around the world could be much worse than we now foresee if recession occurs in the United States next year, which we do not presently expect.”
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