The research team at agency ZenithOptimedia is predicting 4.7% ad spend growth in 2012 in spite of global, bubbling economic turmoil. In a post on the agency’s blog, ZenithOptimedia’s Head of Forecasting, Jonathan Barnard, says, “This acceleration in global expenditure is the result of the ‘quadrennial’ effect and Japan’s recovery from the effects of the earthquake in March. Every four years the quadrennial events – the summer Olympics, the European Football Championship and the US Presidential and other elections – provide a reliable boost to the global ad market.” Read it.
Barnard offered his thoughts on the research in an interview with AdExchanger.com.
AdExchanger.com: What leads you to believe that “Advertisers to invest cash reserves to win market share and stimulate consumer demand”? I thought economic uncertainties would leave them less willing to spend, and stay “in cash”?
JB: Many studies have shown that, on average, advertisers who maintain or increase their marketing expenditure in a downturn, increase their market share into their recovery, while advertisers who reduce their expenditure lose market share. This is often ignored, partly because advertisers need to spend less on something to make their payroll or other vital expenditure payments. That’s not so relevant now, after advertisers have built up their cash reserves since the last downturn – S&P 500 companies have increased their cash and short-term investment holdings by 60% over the last three years.
What role does “brand” play when emerging from a downturn versus going into one?
Brand is always important, but during a downturn consumers take stock of their relationships with brands, reassessing those they consider cheap and good value, unnecessary luxuries, or rewards for their hard work. Brands can benefit by taking advantage of consumers’ changed priorities.
Overall, what factors are driving the increase in internet ad spend from 2011 to 2014?
The main drivers of internet growth are the rapid development of online video, social media, and mobile internet access via smartphones and tablets.
Where do you see Facebook’s share in a few years as a percentage of overall digital ad spend?
Facebook is heading towards 5% of total internet spend this year, and could be 10% within the next few years. It already accounts for 25% of display impressions in the US.
Given some of the recent challenges with debt in the Eurozone, if things got much worse and spread globally, any sense of what the impact would be? Are you doing any modeling here?
It really depends on how bad an economic situation you’re talking about. If we start to see defaults in the eurozone, then we could see 4%-5% decline in spend Western Europe next year, but global growth should remain at +3%. If the whole world enters another recession, though, this number would come down substantially, although we haven’t explicitly modelled this scenario.
By John Ebbert
