IN DEPTH: The advertising downturn is over! (Maybe.)
The end, it appears, is not nigh. While economic conditions have hit advertising revenue badly – global agency ZenithOptimedia puts this year’s decline at about ten percent, and says that every single one of the world’s top media owners apart from Google felt the pinch in the first half of 2009 – there’s now consensus that marketers’ wallets are opening again.
What’s not so certain is quite when, and indeed where, the advertising economy will return to its pre-slump state.
Digital out-of-home has been hurt less badly than many media, notably print, so it may not be surprising that the outlook within this sector is generally more sanguine than in the ad business as a whole.
For example, industry group OVAB Europe, in a survey conducted for its latest European DOOH Business Climate Index, found that three quarters of respondents in the out-of-home sector expected business to get better over the next six months – although that figure had slipped slightly from the previous quarter. Scandinavians and Finns were the most positive; their Russian neighbours the gloomiest.
Similar optimism comes from U.S. aggregator Adcentricity, whose recently-published outlook for 2010 cites research suggests that total North American digital out-of-home spending will reach $4.5bn by 2013 – getting on for twice this year’s $2.6bn figure.
And who’s to thank for this? The downturn, says Adcentricity.
“The economic downturn has been good to digital out-of-home thus far” thanks to the pressure on marketers to find more cost-effective ways to reach the consumer, concludes the firm.
“Early 2009 saw a large surge in exploration of alternative advertising and marketing opportunities across the board. While all of this was happening, digital out-of-home had a strange thing finally happen to it – it developed significant scale as a medium – enough to all of a sudden be worthy of a second look,” says Adcentricity.
Its positive outlook is backed up by other research saying that about 70 percent of North American marketers and brands plan to either maintain or increase their current levels of spending on digital out-of-home.
Tunnel vision
But not all those who depend on advertising dollars are so confident that North America and Europe are the places to look for the light at the end of the tunnel.
ZenithOptimedia, in its latest regular forecast of global advertising spend, sees developing markets as the brighest spot, with 7.8 percent growth in 2010 and 9.8 percent in 2011.
That compares with a 2.9 percent drop for 2010 in the developed markets – which ZenithOptimedia defines as North America, western Europe and Japan – followed by a bounce back of just 1.5 percent in 2011.
“Developing markets’ share of global ad expenditure is rising rapidly: we forecast it to reach 35 percent in 2011, up from 29 percent in 2008,” said ZenithOptimedia.
The out-of-home sector – digital and non-digital – is expected by ZenithOptimedia to return to growth next year, although even by 2011 its global value will not quite have returned to 2007 figures (in constant dollars). It will, however, increase its share of the worldwide advertising market slightly, from 6.6 percent today to 6.8 percent.
At outdoor firm JCDecaux, meanwhile, co-chief executive Jean-Charles Decaux was reported as saying that “it would be premature to speak of a real market recovery”, although he acknowledged that the market had stabilised noticeably during September, particularly in China and France.
So: is that a light at the end of the tunnel, or an approaching train? It seems that the answer very much depends on which bit of track you’re occupying.
www.adcentricity.com
www.jcdecaux.com
www.ovab.eu
www.zenithoptimedia.com
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