Magna Forecasts Ad Spending Drop of 4.5% for 2009

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Magna, a unit of ad holding company IPG, reported that U.S. ad spend will decline 4.5% to $258.7 billion next year, a result of the poor economic climate and the absence of political and Olympic dollars. Magna's forecast for end of year 2008 is for $270.8 billion, a 3.2% decline.

A report released earlier today, by Zenith Optimedia, suggests North American ad dollars will be down by 5.7%, though its total figure for the territory in 2009 was $171 billion.

Magna suggests worldwide advertising will decline slightly, down 0.3% to $640.7 billion this year. Robert Cohen, the company's senior vice president and director of forecasting, suggests and a recovery towards the back half of 2009. "Until consumers start spending more and marketers become confident that sales of their products are recovering, they will not loosen the tight controls on their ad budgets and will also hold down the size of their workforce," read a statement released by Magna on Monday morning.

Cohen presented the report today at a UBS media conference in New York and suggested that advertising expenditure has lagged economic growth for the past few years. Advertising, as a percentage of gross national product, has been falling since 2005. Cohen said the flight from traditional media such as television has been masked in 2008 because of the influx of political money and the Olympic Games. "The trends in local marketing spend are declining even more," he writes in the report.

Separately, media agency GroupM issued its own forecast, suggesting a fall of 3% to $157 billion for the US. GroupM futures director Adam Smith said in a statement, "Advertisers are scrutinizing every penny…Among our own client base we are not seeing wholesale cancellations, but we are seeing migration from expensive and less tried and true media to value and certainty."