Advertising spending booms in emerging markets

Monday, October 24, 2005

Advertising spending is soaring in the developing world, suggesting that US-style consumerism is alive and well everywhere from Brazil and Russia to Saudi Arabia and Indonesia.

In a report to be released today, ZenithOptimedia, a leading advertising buyer, says buoyant conditions in emerging markets have caused it to lift its forecast for global advertising spending growth to 5.2 per cent this year, up from the 4.7 per cent it estimated in June.

Worldwide spending will rise to $406bn this year, from $386bn last year, it said. The biggest contributor to the gain – “by virtue of sheer scale rather than inherent dynamism” – is the US, where advertising spending is expected to rise $5.9bn, the study said.

But the next six biggest contributors to the increase are, in order: Brazil, Russia, India, China, Saudi Arabia and Indonesia – all emerging markets, the latter two in the Muslim world. Together, these markets account for about a third of the growth in global advertising.

The findings are noteworthy given the concerns among some advertising agency executives that opposition to US policies in Iraq and elsewhere could cause some consumers in developing countries to turn away from US products or US-style consumerism.

The ZenithOptimedia numbers do not completely rule out such possibilities, because they do not distinguish between multinational and local advertising spending. But they do suggest that the situation in emerging markets is hardly dire for advertisers.

Latin America is the fastest-growing region this year, with advertising spending rising 19.3 per cent, up from 12.9 per cent in 2004 and 3.5 per cent in 2003. Spending in Brazil alone is expected to rise $1.9bn, accounting for about 10 per cent of global growth. ZenithOptimedia attributed the increase in Brazil to its “consumer credit boom”.

Spending in the region including the Middle East and Africa is expected to rise 17.1 per cent, with higher oil prices fuelling explosive advertising spending growth in Saudi Arabia and nearby countries. Spending in that region went up 29.4 per cent last year to $2.5bn. It is expected to go up 26.6 per cent this year and 26.7 per cent in 2006 – reaching a total of nearly $4bn.

ZenithOptimedia, a unit of Publicis of France, had said in June that television’s share of global advertising spending would fall this year, and it held to that prediction in its new report.

It said television’s market share would drop to 37.1 per cent from 37.4 per cent in 2004, while the internet’s would rise to 4.3 per cent from 3.7 per cent.

Looking forward, it said global advertising spending would rise 6.2 per cent next year and 6.1 per cent in 2007.

(Via PSD Blog)

Source: Financial Times (link opens in a new window)

marketing and advertising