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BAD NEWS JUST GOT WORSE: The crisis in the financial markets has caused ZenithOptimedia to reduce its forecast for growth in global ad spending this year to 4.3 percent from 6.6 percent and, for next year, the company dropped its forecast to 4 percent from 6 percent. “The bank failures will have a fairly small direct effect on ad expenditure — since financial advertising contributes only about 4 percent of global ad expenditure — but fears for the future will cause consumers to cut their spending, while companies carefully inspect their budgets to find cost savings,” the report said. ZenithOptimedia’s new study also noted that, since its last forecast in June, some Western advertisers have cut back campaigns planned for later this year and postponed budget setting for next year.
The media service agency forecasts that Internet ad spending will grow by an average of 23 percent a year between 2007 and 2010 and will increase its share of the ad market from 8.6 percent last year to 13.8 percent in 2010, up from 13.6 percent in the last forecast.
It’s no secret that newspapers, magazines and television continue to lose share to the Internet, but the report says newspapers are suffering the most: “We now forecast newspaper ad expenditure to decline in 2008 and 2009, the first time any medium has shrunk since 2002. Advertisers will spend less in newspapers in 2009 than they did in 2006.” Earlier this year, ZenithOptimedia conducted a survey of U.S. consumers with BusinessWeek to find out how their spending patterns would change in the event of a downturn. The results: 56 percent of respondents would reduce spending on luxury goods, 50 percent would slow travel spending and 39 percent would cut expenditures on entertainment. — Amy Wicks