WORLDWIDE ADVERTISING: 2002 - world bull markets. Zenith Media's worldwide statistics indicate that 2001 was one of the industry's worst years. Adam Smith, the head of knowledge management at Zenith, investigates the figures

Money plus time equals inflation and interest. So when we look at how advertising expenditure rises or falls over time, we have to choose between current or constant prices.

Journalists are simple folk and prefer current prices. The numbers are bigger and make a better story. More worryingly, we get a few calls every year from financial analysts asking us to explain the difference between current and constant.

This year, for a change, we present in constant prices the 25 countries we think will have the fastest-growing ad markets in 2002. Constant prices always mean something. Current prices sometimes mean nothing. If you have 30 per cent ad growth and 30 per cent Retail Price Index, you are standing still. RPI is an arbitrary benchmark, but the most commonly used. A useful one for developing countries is population growth, which is another form of inflation.

If, say, advertising, the economy and the population are all rising by 10 per cent a year, you have growth but not progress.

Constant has its cons, of course. You cannot sensibly calculate RPI for countries with a recent past or present of runaway inflation. If Ruritania begins the year with inflation at 100 per cent and ends the year with 1,000 per cent, what is the annual average? The range of possible answers is huge, and none is believable: extrapolation usually implies Ruritania will be generating a third of the world's economic output within five years.

There are two ways of faking constant price growth rates for countries such as this (most of which are in South America, needless to say). One is to ignore the local currency and just think in dollars. Media in places such as Russia, Brazil and Mexico actually trade in dollars, which saves us a job. Inflation in the US is low. So if the volume of traded US dollars rises 10 per cent in Mexico this year, most of that is genuine growth. Not perfect, but OK as a guide.

The more tenuous way is to start with the local currency, if you must, and change it into dollars. Past exchange rates in these rogue states will resemble a vertiginous spiral which should at least approximate to their declining purchasing power relative to Uncle Sam's.

To project the rate for 2002 we simply add on the expected rate of RPI this year. We are aware of the unreality of exercises like this. There are few more dangerous things that you can do in the real world than gambling on the movement of foreign exchanges. But the exercise provides us with a dollar figure and, if you squint your eyes, you can mistake it for real growth.

So this year we have the top 20 countries which qualify by the gold standard calculation and a further seven of the dodgy dollarised variety which would have made the cut on relaxed criteria. The seven are asterisked and caution is advised when considering their figures.

Finally, another chilling piece of evidence that 2001 was advertising's annus horribilissimus - on the gold standard, Japan was the 19th most successful market. It shrank by 1.3 per cent in constant prices.