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Analyst Insights Emerging Markets Drive Global Advertising Market Growth Past $400B
Oct 26, 2005 – By Barry Zellen

Ad spending around the globe is big business - and it's getting even bigger all the time, driven by double-digit growth in the emerging markets including Africa, the Middle East, and Latin America, with the more mature markets enjoying less robust single-digit growth rates. Internet market research firm eMarketer cites new data from media buying firm ZenithOptimedia, which forecasts that global ad spending will rise 5.2% this year - up from its previous estimate of 4.7%. And, it expects that global ad spending will continue to rise for the next few years - rising another 6.2% in 2006, and 6.1% in 2007. ("Worldwide Ad Spending to Top $400 Billion," October 26, 2005.)

>> Beyond $400B: All said, ZenithOptimedia expects that global ad spending will rise to $406.3 billion this year - cracking the $400 billion threshold for the first time, up from last year's $386.3 billion. In 2006, global ad spending will total $431.3 billion, and in 2007 it will total $457.4 billion.

>> Growth by Geography: ZenithOptimedia breaks its data on advertising spending growth down by region:

> North America: Ad spending in the North America will rise 3.6% this year, to $174.3 billion; in 2006, it will rise 5.6% to $184.1 billion; and in 2007, it will rise 4.5% to $192.4 billion.

> Europe: In Europe, ad spending will rise 3.1% this year to $107.6 billion, in 2006, it will rise 4.4% to $112.3 billion, and in 2007 it will rise 4.5% to $117.4 billion.

> APAC: In APAC, ad spending will rise 5.5% to $84.6 billion; in 2006, it will rise 6.4% to $90.0 billion; and in 2007, it will rise 8.2% to $97.4 billion.

> Latin America: In Latin America, ad spending will rise 19.3% this year to $18.5 billion; in 2006, it will rise 8.8% to $20.1 billion; and in 2007, it will rise 10.2% to $22.1 billion.

> Africa, Middle East & ROW: In Africa, the Middle East and the Rest-of-World, ad spending will rise 17.1% this year to $21.3 billion; in 2006, it will rise 16.5% to $24.9 billion; and in 2007, it will rise 13.0% to $28.1 billion.

>> Growth Drivers: ZenithOptimedia examines which countries are driving the growth in worldwide advertising, and notes the U.S. takes the lead with $5.9 billion in ad spending growth. As it explains, "by virtue of sheer scale, the U.S. is the largest contributor to global advertising growth, providing 30% of this year's ad cash expansion." The next nine largest contributors to ad growth are Brazil (with $1.9 billion in ad spending growth), China (with $1.5 billion), Russia (with $1.2 billion), India (with $667 million), Saudi Arabia and the Pan-Arab region (with $656 billion), Indonesia (with $628 million), Japan (with $606 million), the UK (with $555 million), and Australia (with $550 million in ad spending growth).

ZenithOptimedia observes that the G7 countries are "contributing less to advertising growth than the much more dynamic 'BRIC' economies of Brazil, Russia, India and China. As well, it notes that the Saudi/Pan-Arab region - where "expensive oil has an advertising upside" has been "contributing nearly as much as India." Thus, "together, the BRIC and emerging Muslim markets account for approximately a third of the growth in global advertising."

Even with uneven growth in ad spending around the world - with more rapid double-digit growth in the emerging markets compared to single-digit growth in the more mature markets, ZenithOptimedia finds there is stability in advertising by media type. For instance, over the next three years, TV advertising will account for 37.1% of worldwide advertising in 2005, 37.2% in 2006, and 37.2% in 2007. Next in share is newspaper advertising, which will decline ever so slightly from 30.3% of worldwide revenues in 2005 to 30.1% in 2006 and 29.8% in 2007. Magazine advertising will also hold steady, with 13.4% of worldwide advertising share in 2005, 13.3% in 2006, and 13.4% in 2007. Radio advertising will gradually lose share - and will account for 8.5% of worldwide advertising this year, 8.3% next year and 8.1% in 2007.

Internet advertising for all its hype will gain share by just a few tenths of a percent: in 2005, it will account for 4.3% of worldwide ad spending, rising to 4.7% in 2006, and to 5.0% in 2007.

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