Football World Cup to boost adspend growth in 2006: ZenithOptimedia

MUMBAI: Ad expenditure in 2005 grew 4.9 per cent, which is the average rate at which expenditure has grown for the last decade. However, this year, the football World Cup will arouse intense interest and produce plenty of promotional opportunities. According to a recent study by ZenithOptimedia, the football World Cup will help ad expenditure to grow over a percentage point faster - by 6 per cent - in 2006.

 

 

The agency expects growth to slow slightly, but however, remain above trend, to 5.6 per cent in 2007 and 5.3 per cent in 2008.

 

 

The research also found that most of the largest contributors to the advertising growth will be the emerging markets. Another highlight is that internet advertising will overtake outdoor in 2007.

Advertising expenditure: Major media (newspapers, magazines, television, radio, cinema, outdoor, Internet)

 2004 2005 2006 2007 2008

North America 168,250 173,271 182,209 189,878 197,369

Europe 104,567 108,448 113,010 117,726 122,657

Asia/Pacific 78,802 83,162 88,819 95,420 101,816

Latin America 15,546 18,021 19,754 21,090 22,244

Africa/M. East/ROW 18,160 21,206 24,581 28,043 32,190

World 385,324 404,108 429,373 452,157 476,276

Source: ZenithOptimedia, US$ million, current prices. Currency conversion at 2004 average rates.

 

Year-on-year change (%): Major media (newspapers, magazines, television, radio, cinema, outdoor, Internet)

 2004 v 03 2005 v 04 2006 v 05 2007 v 06 2008 v 07

North America 6.1 3.0 5.2 4.2 3.9

of which USA 6.0 2.9 5.2 4.2 4.0

Europe 6.4 3.7 4.2 4.2 4.2

Asia/Pacific 6.5 5.5 6.8 7.4 6.7

Latin America 13.4 15.9 9.6 6.8 5.5

Africa/M. East/ROW 27.7 16.8 15.9 14.1 14.8

World 7.4 4.9 6.0 5.6 5.3

Source: ZenithOptimedia

ZenithOptimedia has forecasted that world ad expenditure will grow faster than world GDP in every year to 2008. Advertising accounted for 0.96 per cent of world GDP in 2005, and the agency expects this to rise to 0.99 per cent by 2008.

This would be its first period of consistent out-performance since the late 1990s and suggests that the advertising cycle has at last emerged from the trough it entered in 2001. Advertising will remain well below the peak of 1.08 per cent of GDP it reached in 2000, though, suggesting there is plenty of room for further growth.

The report also stated that between 2005 and 2008 six of the 10 largest contributors to advertising growth, and 11 of the 20 largest, will be emerging markets. Brazil, China, Indonesia, Mexico, Poland and Russia are all top-ten contributors of new ad dollars. "We expect their ad markets to grow by $19.2 billion between 2005 and 2008 - providing 27 per cent of total world growth - while their share of world expenditure increases from 7.9 per cent to 10.8 per cent.

Top ten contributors to advertising expenditure growth 2005-2008

 Contribution US$m % of market 2005 % of market 2008

USA 23,318 41.9 40.5

China  6,441  2.4 3.5

Russia  5,968  1.3  2.3

Japan 4,444  10.3  9.7

UK  3,118  5.4  5.2

Indonesia  2,512 0.8  1.2

Brazil 1,661 1.6  1.7

Spain  1,443 2.1 2.1

Mexico  1,382 0.9 1.0

Poland  1,239 0.9 1.0

China was the seventh-largest ad market in 2005 and the report predicts it to be fifth-largest in 2008. It is expected to grow by 66 per cent over the three-year forecast period, overtaking Italy in 2006 and France in 2008. Also, Russia will be a top-10 market by the end of 2008, leaping from 14th place in 2005 to 8th in 2008 as it more than doubles in size.

As far as internet is concerned, ZenithOptimedia has revised its internet forecasts upwards once again as it has continued to exceed expectations. Internet will attract 6.5 per cent of all advertising in 2008, up from 4.5 per cent in 2005 (and up from the 6 per cent the agency predicted for 2008 in December).

The internet is now firmly established as a mainstream advertising medium in developed markets, and in many developing markets too. The report predicts it will overtake outdoor in volume in 2007, even though outdoor is gaining share itself, and that by 2008 it will be catching up with radio too (which will have a 7.9 per cent share, down from 8.5 per cent in 2005).

 

 

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