• by Steve McClellan  @mp_mcclellan, July 19, 2012

The continuing uncertain economic climate in both Europe and the U.S. has led WPP’s GroupM to downgrade its global ad spending growth forecast for 2012. The firm now predicts growth will reach 5.1% to $506 billion in measured media.

In December of last year, the company -- which oversees media shops such as Mindshare, MediaCom, MEC and Maxus -- predicted growth would surpass 6% for total spending of $522 billion.
 
The revised spending forecast was made in GroupM’s biannual worldwide report “This Year, Next Year,” which also said that 2011 advertising spending in measured media hit $482 billion, a 5% increase over 2010 spending of $459 billion.
 
The 70-country forecast also predicted that global ad spending in 2013 will increase 5.3 percent over 2012, for a total of $533.2 billion.
 
The shop also downgraded its growth outlook for the U.S. market. The new projection foresees spending in the U.S. this year totaling $152 billion -- up 3.6%, a slight decline from the earlier growth forecast of 4%. For 2013, the new report predicts a 3.1 percent increase in U.S. spending for a total of $157 billion.
 
“We attribute the decline in U.S. ad spending to a number of factors, including a loss of economic momentum, the global deterioration from all continents, but particularly the Eurozone and political and fiscal uncertainty at home for the election and beyond,” stated GroupM Chief Investment Officer Rino Scanzoni.
 
Ad investment in parts of the Eurozone--Greece, Ireland, Italy, Portugal and Spain -- fell a combined 6% percent in 2011 and is expected to fall a further 8.8% in 2012 before stabilizing in 2013, according to the report. GroupM futures director Adam Smith indicated this prediction “assumes an orderly normalization of the Eurozone.”
 
The brightest picture remains on the digital front, where GroupM’s new forecast is higher than previously anticipated, with global growth now predicted to reach 18% for a total of $99 billion, a two-percentage-point increase over the earlier forecast. For 2013, the report forecast a 22% digital spending hike.
 
“Internet advertising is growing in every country, so powerful is its structural and evolutionary development,” Smith stated.
 
The revised GroupM forecast follows several other recent downgrades in predicted global spending from firms including ZenithOptimedia, Barclays Bank and Interpublic’s MagnaGlobal.

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