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GroupM predicts 5.5% ad spend dip

Media agency report revises forecast for 2009

Marketers will spend less on advertising this year than originally expected.

A Wednesday report from WPP-owned media agency GroupM revised the company’s global ad spending forecasts for the year, predicting it will fall 5.5% to $417 billion vs. the 4% drop it originally anticipated in March.

The good news, however, is that companies are expected to devote more coin to campaigns in 2010, when the worldwide ad market is expected to decline just 1.4% to $411 billion.

“Our global forecast for 2009 has finally stopped tumbling,” said GroupM futures director Adam Smith in London. “The 15 countries still reporting positive ad growth in 2009 has become 33 in 2010, and the number could rise as we phase through the year.”

Much of the recovery is expected to take place overseas — primarily in Brazil, Russia, India and China.

The Asia-Pacific region is expected to show a 3.2% uptick in spending in 2010 to $117 billion.

“China’s economic stimulus has already bolstered confidence, and the demand for advertising in Russia will recover quickly if $70-a-barrel oil prices are here to stay,” Smith said.

In the U.S., ad spending is expected to fall 4.3% this year and 6.5% next year, according to the report, marking the third-consecutive year media buys will have decreased.

The situation is a depressing one for companies reliant upon advertising for most of their revenue.

There are, however, signs that the ad market is starting to stabilize in the U.S.

“We expect a bottoming-out on local media in 2009,” said Rino Scanzoni, chief investment officer at GroupM in New York. “However, we are expecting further contraction on national media — particularly television — as clients adjust budgets to reflect a continued pessimistic consumer spending forecast.”

GroupM added that advertising lagged the economy’s recovery for about 18 months after the 1992 recession and a year after the one in 2001.

Among specific ad categories, automotive and financial firms are advertising the least, while package-goods companies are showing resilience during the recession.

Meanwhile, digital, which accounted for about 10% of global ad spending in 2007, is expected to make up 15% of all ad dollars in 2010.

GroupM oversees WPP’s media agencies, which include MediaCom, Mediaedge:cia, Mindshare and Maxus.

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