WPP Chief Executive Officer Martin Sorrell. Photographer: Tim Boyle/Bloomberg
Dec. 6 (Bloomberg) — Martin Sorrell, chief executive officer of WPP Plc, talks about the outlook for the advertising industry in 2011. Sorrell speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This is an excerpt of the full interview. Source: Bloomberg)
Worldwide advertising spending will continue to recover next year, led by expanded Internet marketing and outlays in emerging economies, according to researchers ZenithOptimedia Group Ltd. and Magna Global.
Spending will increase 4.6 percent next year, after “surprisingly strong” 4.9 percent growth in 2010, said ZenithOptimedia, a company owned by Publicis Groupe SA that buys advertising for clients including drugmaker Sanofi-Aventis SA. Magna, which tracks ad sales not spending, projects 5.4 percent growth in 2011, following a 6.9 percent gain this year.
Web advertising is growing three times faster than the market as a whole, according to ZenithOptimedia. China will become the third-largest ad market behind the U.S. and Japan next year, displacing Germany, it said. While spending is recovering after the 2008 financial crisis, advertising growth is short of the “long-term trend rate of 6 percent,” London- based ZenithOptimedia said.
“The key result of this update is the continued rise of developing markets and digital media, and their central role in driving global growth,” ZenithOptimedia Chief Executive Officer Steve King said in the report.
In a separate forecast, WPP Plc’s GroupM media-buying unit said today that global ad spending will probably exceed $500 billion in 2011 for the first time. Ad spending will increase 5.8 percent over 2010’s $474 billion, the company said in a statement.
“We’ve seen a significant rebound in advertising spending in the U.S. over the last six months,” GroupM Chief Investment Officer Rino Scanzoni said in the statement.
WPP’s Chief Executive Officer Martin Sorrell told Bloomberg TV in an interview today that the U.S. ad market is “marked by a bounceback” of traditional advertising, behaving more like an emerging market than a mature one. Sorrell added that the U.S. market will not grow as strongly in 2011.
WPP, the world’s largest ad company, continues to seek small-and-medium-sized acquisitions and is seeing “some excesses” in the mergers and acquisitions market, Sorrell said.
GroupM said measured global advertising recovered nearly all the dollars it lost in 2009. ZenithOptimedia said that worldwide ad spending won’t exceed the 2008 peak until 2012. High debt in the developed world, U.S. unemployment and default concerns in the Eurozone pose risks to growth, the agency said.
ZenithOptimedia predicts growth of 5.2 percent in 2012 and 2013. Worldwide ad spending will total $449.7 billion this year, the company said.
Web, Print, TV
Web spending will rise from 14 percent of the market in 2010 to 18 percent in 2013, fueled by video and social media, ZenithOptimedia said. Newspaper and magazine outlays will shrink 2 percent. TV remains the dominant medium and will expand its share to 42 percent by 2013 from 41 percent this year.
Growth in Internet outlays may be even larger given Web- related “activities that do not count as ad expenditure in the traditional sense,” King said in the report.
With ad spending growth of 51 percent projected for the next two years, China will overtake Germany as the world’s third-largest ad market in 2011, ZenithOptimedia said. Asia Pacific spending will rise 23 percent, the company said.
Expenditures in Latin America are projected to grow 26 percent from 2010 to 2013, while North America will increase 9 percent and Japan 5 percent during the same period, according to ZenithOptimedia. Spending in central and Eastern Europe will increase 31 percent.
Magna, owned by Interpublic Group of Cos., estimates advertising sales worldwide will increase 5.4 percent to $412 billion next year and top the firm’s prior growth estimate of 4.2 percent with Argentina, India and China leading the way.
The ad market recovered more quickly this year than anticipated, with projected 6.9 percent growth outpacing the firm’s 5.6 percent estimate.
Online advertising will overtake newspapers as the world’s second-largest ad medium behind TV by 2013, New York-based Magna said. Internet ad revenue may reach $117 billion by 2016, it said.