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Zenith: Global Forecast Revised Down; But Display Remains ‘Invigorated’

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The recent series of catastrophe’s that befell Japan in the past few weeks along with the economic uncertainty raised by the uprisings in the Middle East have dimmed the outlook for global advertising this year a bit, the latest forecast from Publicis Groupe’s ZenithOptimedia says. Internet advertising, though, is still expected to see its growth projections continue to surge this year and over the next two years, when Zenith says it will surpass the total amount of ad dollars spent on newspapers by 2013.

Zenith is now projecting global ad dollars to gain a decent 4.2 percent in 2011. That’s down from the 4.6 percent the media shop forecast in December. The Japanese earthquakes, resulting tsunami and following nuclear disaster, in addition to the oil price spikes related nerves caused by the Middle East political upheaval is not expected to completely derail the ad recovery that began in the latter part of 2009. But it has injected a bit more caution in Zenith’s forecast that wasn’t there before.

Meanwhile, the expectation that the internet will overtake newspapers as the second-largest global ad medium after TV have been around for a while. And some countries have already seen the eclipse of newsprint ad spending by the web as ink-and-paper dollars have practically plunged to a new historic low every quarter for the past year.

But as my paidContent UK colleague Robert Andrews showed last week, digital isn’t necessarily the enemy of newspapers; display ad dollars also mean more and more to papers’ incremental revenue streams.

In terms of charting the changing balance between newspaper and online ad spending, worldwide newspaper ad expenditures were still 51 percent larger than the web’s in 2010. However, newspaper dollars are shrinking by 1.4 percent a year, as circulations continue to fall in developed markets, and readers shift to the internet.

At the same time, internet advertising continues to grow at breakneck pace, at a forecast average rate of 14.4 percent annually between 2010 and 2013. Zenith is forecasting newspaper ad spend to fall from $95.2 billion in 2010 to $91.2 billion in 2013, while internet ad expenditure rises from $63 billion to $94.5 billion over the same period.

Newspapers’ losing race for ad dollars isn’t too surprising. What has been largely unexpected until recently has been display advertising taking over from search as the main driver of internet ad growth. Still, it’s easy to see that the double digit gaines for online video and social media even during the depths of the recession has put display ad sales in a stronger position.

As a result, Zenith is calling for global display ad spending to grow at an average of 16.4 percent a year to 2013, while paid search rises by 12.8 percent and classified by 10.2 percent.