Ad spending in Greece and Spain to drop by €6.3bn

Ad spending forecasts are revised up or down (usually down, which tells you something) nearly as often as the UK’s Office of National Statistics (ONS) discloses that its output figures are wrong.

Now ZenithOptimedia is having another go at 2012, revising its growth forecast down from 6.1 per cent to 5.2 per cent with a 3.1 per cent fall in the eurozone. Last week Nielsen said ad spending over the past year had risen just 2.4 per cent with Europe as a whole (not just the stricken eurozone) falling by 3.8 per cent, which sounds a bit more like it.

But the optimists at Publicis Groupe’s ZO do say that ad spending in Greece will fall 33 per cent this year, a whopping €2.3bn while it will fall in Spain and Portugal by 13 per cent, wiping €4bn off Spain (less off Portugal presumably). Now €6.3bn (around €7.3bn or so if you include Portugal) is a lot of dosh and this will hammer the big marcoms groups exposed to these countries as well as local agencies and media owners.

The world outside Europe will make this up to a degree but growth in the US has stalled recently, China is slowing too (albeit from unsustainably high levels) and even South America has dropped back from over ten per cent to around 7.7 per cent. ZO says the Far East and South America will bounce back but there’s no guarantee. Advertisers will see how resilient sales are before they boost their budgets again.

“The clear change is the further deterioration of the eurozone,” says ZO’s head of forecasting Jonathan Barnard. “Advertisers have taken a fairly hard look at their budgets and decided they were planning to spend too much this year. They have cut back but they are also projecting lower growth in the next couple of years.”

Well we could have told you that a year ago Jonathan. What these figures/revisions, or whatever you like to call them, also show is that things like the Olympics and US presidential elections are not the cast-iron spending guarantees that some people (WPP’s Sir Martin Sorrell for one) like to think. As any media salesman will tell, advertisers do indeed move money into these ‘events’ but they also cut back elsewhere.

So it’s a pretty grim forecast. The logical conclusion is that it will lead to a new and hefty round of redundancies across the big marcoms companies in the very near future. Bartle Bogle Hegarty, now wholly-owned by Publicis Groupe and subject to its bean counters, has just wielded the axe in New York. It won’t be the first.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.