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GroupM Cuts Ad Spending Forecast

Media buyer GroupM says it reduced its forecast for 2011 advertising spending growth to 4.8% from 5.8% because of the natural disasters in Japan and political upheaval in the Middle East.

GroupM is predicting that measured media spending worldwide will hit $506 billion in 2011, upfront $483 billion. For 2012, GroupM is forecasting a 6.8% increase in ad spending to $540.3 billion. Contributing to the 2012 growth are the Summer Olympics and a presidential election year in the United States.

In the U.S., GroupM expects 2011 spending to hit $148 billion, a 3.8% increase over 2010. U.S. ad spending should reach $154 billion in 2012, a 4.2% hike.

"It's highly unusual for natural disasters to measurably impact the totality of global advertising," said Adam Smith, director of GroupM ‘s Future's unit.  "However, the earthquake and subsequent tsunami in Japan was of this rare scale."  He added that GroupM's 2011 forecast for Japan dropped from an anticipated 3% growth to a 5% decrease, a difference of $4 billion, or 0.8% of global spending.

"Without the election, US ad growth in 2012 would probably be slower than what we are predicting for 2011," said Rino Scanzoni, GroupM's chief investment officer.  "The elections make heavy use of local TV and radio, so national media may well find 2012 is slower-going in any case.  As for the summer Olympics, the broadcasts will attract substantial advertising investment, but the majority of this will be displaced rather than new funds."