Growth in adspend to slow next year

The growth in spend on media and marketing services is set to slow next year, according to the first global forecasts from WPP's Group M.

Predictions from the group estimate that year-on-year growth in revenue will be 6.2 per cent by the end of 2006, putting global media and marketing spend at $673 billion. But that figure is set to fall to 6 per cent in 2007. In Europe, growth will slow by half a percentage point from 4 per cent in 2006 to 3.5 per cent in 2007.

The figures are the first global revenue predictions from Group M and follow the appointment of Adam Smith as its futures director. Group M poached Smith at the end of last year from ZenithOptimedia, where during his 12-year tenure he made the network famous for its statistical publications and predictions on global marketing revenue.

The rate of growth in media spend is also projected to drop off around most of the globe in 2007, with the exception of Western Europe and South-East Asia, where the level of growth is expected to rise by 3.6 per cent and 6 per cent respectively.

One important factor slowing growth rates is the rise of online advertising, which is lowering the cost of customer acquisition, according to the report.

Earlier this year, Group M estimated that global internet ad revenue is set to overtake national newspaper ad revenue by the end of 2007.

SLOWING GROWTH AROUND THE WORLD
2003 2004 2005
Revenue Yr-on-yr Revenue Yr-on-yr Revenue Yr-on-yr
USdollars (%) USdollars (%) USdollars (%)
(bn) (bn) (bn)
North America 229 6.8 252 10.0 264 4.7
Latin America 23 14.1 26 14.7 31 19.0
Europe 185 -0.4 193 4.6 202 4.7
Asia-Pacific* 117 7.2 128 9.7 136 6.1
World 554 4.7 600 8.4 634 5.6

2006 2007
Revenue Yr-on-yr Revenue Yr-on-yr
USdollars (%) USdollars (%)
(bn) (bn)
North America 277 5.0 289 4.8
Latin America 37 17.7 43 17.3
Europe 211 4.0 218 3.5
Asia-Pacific* 148 9.0 162 8.8
World 673 6.2 713 6.0
Source: Group M *Includes rest of world. Figures for 2006 and 2007 are
forecasts.

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