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U.S. Ad Spend to Grow 3.7% in ‘08, Up from 2.8% in ‘07; Global to Grow 7%

Advertising spending in U.S. measured media is expected to increase almost 4 percent in 2008 compared with 2007, when spending is expected to increase 3 percent, according to a new study from GroupM, MarketingCharts reports. Worldwide spending is expected to go up 7 percent in 2008, after an anticipated 6 percent increase in 2007.

The study, “This Year, Next Year,” is part of GroupM’s media and marketing forecasting series drawn from data supplied by holding company WPP‘s resources in advertising, public relations, market research, and specialist communications.

U.S. advertising spending is expected to increase 3.7 percent, to $168.6 billion, in 2008. Spending in 2007 is expected to come in at 2.8 percent higher than in 2006. Worldwide spending is expected to go up 6.8 percent - to some $479 billion: See table of global ad spend in measured media, by region, 2005-2008.

Television and the internet are the primary engines of global ad growth, with 50 percent and 30 percent, respectively, of additional new investment in 2008, according to GroupM Futures Director Adam Smith, who oversees “This Year, Next Year” reports.

He also said spending on marketing services, such as sponsorships and public relations, is growing at a faster rate than for traditional advertising.

Smith reported that 5 percent of global ad investment is expected to shift from developed to emerging economies in 2008 - the largest such shift ever recorded:

• The main geographic contributors to growth next year are predicted to be China, with 21 percent of all new money.
• Russia and Brazil will each contribute 6 percent.
• India will account for 3 percent.
• The U.S. remains the second-highest contributor at 20 percent of all new money.

“This eastward shift is a form of ‘advertising arbitrage’ in which traditional media dollars are moving to the place where they can do the most good,” Smith said.

Also according to the GroupM report:

• Next year’s spending expectations largely reflect the Olympics and the U.S. election:
  • The Games are forecast to bring $1 billion in ad spending to national TV and $200-$300 million to local broadcast.
  • The election is even more important to local broadcast and is expected to inject nearly $2 billion in 2008 before facing a tough adjustment in 2009.
• Internet ad spending is expected to exceed 10 percent of global ad investment in 2008 for the first time ever.
• Search will comprise 65-70 percent measured online advertising in 2008, up from 50 percent in 2005.
• Another first, in one country - Sweden - online advertising is expected to be the largest single medium. The U.K. and Denmark are likely to be the next in line.
• Advertising spending in newspapers is expected to continue to suffer, and new softness is already evident in some large categories such as automotive, airlines, and retail. The continued heavy loss of classified advertising to the internet continues to do the most serious damage.

See coverage of GroupM’s previous forecast: “GroupM Global Ad Forecast: $433B in ‘07, $462B in ‘08”