Saturday, September 26, 2009

Online advertising to grow seven times faster

• ZenithOptimedia forecasts global internet adspend to grow 28.2% in 2007, while adspend
in other media grows 3.9%
• The internet’s share of total adspend will increase from 5.8% in 2006 to 8.6% in 2009,
and is headed for well over 10%
• The internet will overtake outdoor this year and radio in 2009
Global advertising expenditure by medium
US$ million, current prices Currency conversion at 2005 average rates.
2005 2006 2007 2008 2009
Newspapers 119,178 123,460 127,125 131,179 135,228
Magazines 52,993 54,807 57,021 59,450 62,078
Television 151,187 160,391 167,149 176,671 184,502
Radio 34,348 35,443 36,543 37,821 39,548
Cinema 1,697 1,812 1,938 2,087 2,272
Outdoor 21,769 23,473 25,190 27,054 29,126
Internet 18,712 24,454 31,344 36,926 42,685
Total 399,883 423,839 446,310 471,189 495,438
Share of total adspend by medium 2005-2009 (%)
2005 2006 2007 2008 2009
Newspapers 29.8 29.1 28.5 27.8 27.3
Magazines 13.3 12.9 12.8 12.6 12.5
Television 37.8 37.8 37.5 37.5 37.2
Radio 8.6 8.4 8.2 8.0 8.0
Cinema 0.4 0.4 0.4 0.4 0.5
Outdoor 5.4 5.5 5.6 5.7 5.9
Internet 4.7 5.8 7.0 7.8 8.6
ZenithOptimedia predicts that internet adspend will grow 28.2% in 2007, while the rest of the
market grows 3.9%. The rise of the internet has been dramatic. It has taken only eleven years to
overtake two long-established media: cinema (which it overtook in 1997) and outdoor (which it
overtook this year), and by 2009 it will be larger than radio.
There is still plenty of potential for growth in internet adspend. Internet penetration is peaking at
about 70% in the most mature markets, but is only 17% worldwide. Even in the developed
markets, the internet receives a much lower share of ad budgets than the amount of time
consumers devote to it would suggest it warrants. In 2005 consumers in the USA, Japan and the
UK (the top three ad markets) spent 21.9% of their media time using the internet, yet advertisers
in these three markets spent only 6.8% of their budgets online – a consumption-to-spending ratio
of more than 3:1.
We expect the internet to take nearly 9% of global adspend by 2009, but experience from the
most developed markets suggests it is heading for well over 10%. The internet already attracts
more than 10% of adspend in three markets (Norway, Sweden and the UK), and by 2009 we
expect it to do so in ten markets (Australia, Canada, Israel, Japan, Norway, South Korea,
Sweden, Taiwan, the UK and USA). The internet has its highest share in the UK, where it will
attract 13.5% of adspend this year and 21.5% in 2009.
Internet expenditure by type
US$ million, current prices Currency conversion at 2005 average rates.
2005 2006 2007 2008 2009
Display 7,043 8,617 10,462 11,849 13,292
Search 7,833 10,610 13,993 16,803 19,711
Classified 3,291 4,578 6,169 7,532 8,856
Other * 545 649 721 742 825
Total 18,712 24,454 31,344 36,926 42,685
* email and mobile advertising
Paid search is already the largest type of internet advertising, and the gap between search and
display is widening. However, display includes video ads and other innovations that are
exploiting the creative opportunities offered by high-speed broadband, and still has a lot of
potential for growth. Meanwhile classified continues to migrate from print to online.
Apart from the internet, only cinema and outdoor are forecast to grow faster than the market to
2009. Cinema is the smallest of the traditional media – less than a tenth the size of the internet
in dollar terms – but it is new and growing quickly in the US. In most developed markets, cinema
chains continue to construct new multiplexes and improve the cinema-going experience,
attracting higher admissions.
Outdoor continues to gain share as contractors invest in better displays and better research.
Outdoor is reaching further into the places where people consume (such as shops, bars) and its
high reach means it’s a good substitute for TV. Outdoor is hard to avoid, yet not intrusive, and is
good for simple brand communication.
Newspapers and magazines are still growing – by 3% and 4% a year respectively. Even after
adjusting for inflation, print adspend continues to grow by 1% a year. Classified advertising is
migrating to the internet, however, or being substituted by auction or search sites, while
newspaper circulation continues to decline in the developed world.
Television’s share of adspend has been falling for a while in some markets, but this is the first
time we have seen sustained loss of share on a global level. The migration of viewers from
premium mass-audience channels to cheap specialist channels (which has been enabled by the
spread of digital television) is holding down prices.
Radio is losing share in developed markets, where it is suffering from substitution by paid
services (such as satellite radio in the USA) and audio over the internet.
Advertising expenditure by region
Major media (newspapers, magazines, television, radio, cinema, outdoor, internet)
US$ million, current prices. Currency conversion at 2005 average rates.
2005 2006 2007 2008 2009
North America 174,072 183,182 190,828 198,634 205,690
Western Europe 98,111 101,544 105,391 109,706 114,442
Asia Pacific 85,496 90,542 96,217 103,334 109,441
Central & Eastern Europe 23,336 27,210 31,455 35,994 41,006
Latin America 18,401 19,732 20,568 21,570 22,647
Africa/M. East/ROW 10,434 12,812 14,188 15,863 17,588
World * 409,849 435,022 458,648 485,101 510,815
Source: ZenithOptimedia
* The totals here are higher than the totals in the ‘Global advertising expenditure by medium’ table above, since this table includes
total adspend figures for a few countries for which spend is not itemised by medium
Major media (newspapers, magazines, television, radio, cinema, outdoor, internet)
Year-on-year change (%)
2005 v 04 2006 v 05 2007 v 06 2008 v 07 2009 v 08
North America 3.0 5.2 4.2 4.1 3.6
of which USA 2.9 5.2 4.1 4.1 3.5
Western Europe 3.7 3.5 3.8 4.1 4.3
Asia Pacific 5.4 5.9 6.3 7.4 5.9
Central & Eastern Europe 15.4 16.6 15.6 14.4 13.9
Latin America 18.9 7.2 4.2 4.9 5.0
Africa/M. East/ROW 15.8 22.8 10.7 11.8 10.9
World 5.3 6.1 5.4 5.8 5.3
Source: ZenithOptimedia
Global adspend continues to grow slightly faster than average, thanks to the benign state of the
economy. ZenithOptimedia predicts the world ad market will grow 5.4% in 2007, 5.8% in 2008
and 5.3% in 2009, staying ahead of the 5.1% rate it has grown at for the last ten years. Adspend
is not growing faster than GDP, though, so this growth looks sustainable in the longer term.
Asia Pacific, Central & Eastern Europe and the Middle East are driving the above-trend growth;
North America, Western Europe and Latin America are behind the world average
The Winter Olympics was popular in North America and boosted ad growth in the first half of this
year; the US mid-term elections bolstered the second half. We expect slower 4% annual growth
for 2007-2009 as US economic growth continues to subside from its 2004 peak.
Western Europe has lagged North America this year, despite hosting the Winter Olympics (in
Italy) and the football World Cup (in Germany). However, we expect its growth rate to edge up
each year as the Eurozone economy recovers.
Asia Pacific spend is accelerating in the run-up to the Beijing Olympics in 2008. We expect
growth to drop off slightly in 2009, the year after the Olympics, but it should remain faster than
the growth in North America, Western Europe and Latin America. China, India and Indonesia all
continue to grow at double-digit rates. The gap between Asia Pacific and Western Europe will
narrow from US$11 billion in 2006 to just US$5 billion in 2009.
The fastest-growing region is Central & Eastern Europe, where ad markets are rushing towards
maturity. Although the ad market in Central & Eastern Europe is barely a quarter of the size of
the ad market in Western Europe (27% in 2006), we predict it will grow by US$13.8 billion
between 2006 and 2009, ahead of Western Europe, which will grow by US$12.9 billion.
After very rapid growth in 2004 and 2005, Latin America is settling down to more moderate
adspend growth over the next three years. The expansion of Latin America’s ad market has been
characterised by years of wild growth punctuated by years of steep decline. 4%-5% annual
growth looks more sustainable than the 13%-19% we saw in 2004 and 2005, and in fact is
slightly higher than the 3.5% average growth rate over the last ten years.
The Middle East is driving the rapid growth of our ‘Africa/Middle East/Rest of World’ category,
thanks to oil dollars and the proliferation of Middle Eastern media. This year’s spike in oil prices
has caused a corresponding peak in ad market growth, but even after the recent moderation in
prices we expect 11%-12% annual growth.
China and Russia are rising quickly through the ranks of the world’s largest ad markets. In 2005
China was the seventh-largest; this year it is sixth; and it will take fifth place in 2008. Russia is
moving up even faster: it will be 13th this year, eighth in 2008 and seventh in 2009.
China and Russia will be the second and third largest contributors of new dollars to the world ad
market between 2006 and 2009, by virtue of their rapid growth and large scale. Each will
contribute 9% of the extra ad expenditure. The USA, however, will still add far more ad dollars
than any other market (30% of the global total), despite its more modest growth in percentage
terms.
Advertising Expenditure Forecasts is published quarterly priced £395. It may be ordered in hard
or soft copy from www.zenithoptimedia.com
For further information, please contact:
Jonathan Barnard
Head of Publications
Tel: +44 20 7961 1192
Fax: +44 20 7291 1199
E-mail: jonathan.barnard@zenithoptimedia.com
Anne Austin
Senior Publications Executive
Tel: +44 20 7961 1194
Fax: +44 20 7291 1199
E-mail: anne.austin@zenithoptimedia.com
Nicky Hutcheon
Senior Publications Executive
Tel: +44 20 7961 1195
Fax: +44 20 7291 1199
E-mail: nicky.hutcheon@zenithoptimedia.com
ZenithOptimedia is one of the world's leading global media services agencies with 175 offices in
69 countries.
Key clients include Alcatel, Beam Global Spirits & Wine, British Airways, Darden Restaurants,
Electrolux, General Mills, Giorgio Armani Parfums, Hewlett-Packard, Kingfisher, Mars, MBNA
Europe, Nestlé, L'Oréal, Puma, Polo Ralph Lauren, Qantas, Richemont Group, Sanofi-Aventis,
Siemens, Thomson Multimedia, Toyota/Lexus, Verizon, Whirlpool, Wyeth and Zurich.
ZenithOptimedia is committed to delivering to clients the best possible return on their advertising
investment.
This approach is supported by a unique system for strategy development and implementation,
The ROI Blueprint. At each stage, proprietary ZOOM (ZenithOptimedia Optimisation of Media)
tools have been designed to add value and insight.
The ZenithOptimedia Village enables the widest range of communications opportunities and
skills to be brought together to ensure the most powerful connections are made with consumers.
For further information on ZenithOptimedia, please contact:
Steve King
Chief Executive Officer
Tel: +44 20 7961 1046
Fax: +44 20 7961 1042
E-mail: steve.king@zenithoptimedia.com
John Taylor
Director of Client Service - Worldwide
Tel: +44 20 7961 1133
Fax: +44 20 7961 1002
E-mail: john.taylor@zenithoptimedia.com
Tim Jones
Chief Executive Officer – Americas
Tel: +1 212 859 5100
Fax: +1 212 727 9495
E-mail: tim.jones@zenithoptimedia-na.com
Philip Talbot
Chief Executive Officer – Asia Pacific
Tel: +852 2236 9080
Fax: +852 2250 9388
E-mail: philip.talbot@zenithoptimediagroup.com.hk
All our publications are available online at www.zenithoptimedia.com

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