Advertising outlook weakens in US

Advertising outlook weakens in US
By Carlos Grande
Copyright The Financial Times Limited 2007
Published: July 2 2007 12:13 | Last updated: July 2 2007 12:13


Advertising forecasters have downgraded prospects for the US, challenging expectations of a boost to the marketing industry from the presidential election race and the 2008 Beijing summer Olympics.

Zenith Optimedia, the international media buyer, on Monday shaved its 2007 expectations of US advertising expenditure growth to 3.3 per cent at constant currencies.

Zenith, part of Publicis, the Paris-headquartered marketing services group, says weak expenditure on US network television and trade magazines to reduce further its previous estimate of 3.4 per cent, which had already come down from 4.1 per cent in December.

Zenith follows recently reduced US forecasts by Carat, part of Aegis, the UK-listed media and research group, and a gloomy analysis by Universal McCann, part of Interpublic, the US-listed marketing services group.

Universal McCann said US businesses were cutting back to focus on improving productivity and profits and building up cash resources. It puts US advertising growth at 3.1 per cent this year.

The US is the world’s biggest advertising market and the key profit territory for the world’s two largest marketing services groups - Omnicom of the US and UK-listed WPP.

Worldwide, the industry would normally expect a jump in expenditure during a period which includes the run up to the US presidential elections, the Euro 2008 football championships and the summer Olympics in China.

The current downgrades for the US contrast with upbeat assessments from Zenith and others of prospects for global advertising, especially internet marketing.

Interest in online video advertising and localised marketing on search engines has encouraged Zenith to publish upgraded figures for expenditure on internet advertising.

It now believes internet advertising will grow by 82 per cent between 2006 and 2009, while the rest of the advertising sector grows by 13 per cent during the same period.

Zenith estimates worldwide advertising expenditure will grow by 5.5 per cent this year and by 6.4 per cent in 2008. It calculates that the Beijing Olympics will generate about $3bn of extra advertising expenditure globally in 2008.

Sentiment towards western european markets has also improved: Zenith estimates that German advertising last year experienced its fastest growth rate since 2000.

Carat estimates that global advertising expenditure will increase by 5.8 per cent this year and 6.4 per cent in 2008.

Univeral McCann predicts worldwide advertising will grow by 4.2 per cent in 2007.