ZenithOptimedia upgrade fuels hopes that advertising sector is back on track for growth

HOPES are high that the advertising market has turned a corner after major media buyer ZenithOptimedia yesterday upgraded its global growth forecasts to 2.2 per cent.

It is the second time the agency, which is part of the Publicis Group, revised its outlook for 2010, after posting an improved 0.9 per cent forecast last December. Growth is being driven by developing countries but the agency said it has also seen some signs of stabilisation in developed markets – including in the UK TV advertising market.

Onscreen advertising in Britain was up 7 per cent in the first three months of the year and could expand by as much as 16 per cent in the second quarter, the firm said.

Worldwide, advertising spend is expected to grow to $456 billion (299bn) this year, up from $446bn in 2009. The report did not include a UK break-down but across western Europe, the advertising market is tipped to hit $108bn in 2010, up from $107.8bn in 2009.

However, western European markets are not forecast to recover over the next couple of years to pre-recession levels, when advertisers parted with $121bn in 2008. By 2012, the market is only expected to reach $114bn.

The recovery globally is being fuelled by a significant increase in internet and TV advertising. TV advertising worldwide is forecast to hit $181bn this year, up from $173bn in 2009.

By 2012, it will have reached just under $200bn, the agency said.

Although internet marketing still makes up a relatively small part of the sector overall, it is likely to reach just under $63bn this year from $55bn in 2009, according to the report.

By 2012, the internet market is tipped to hit almost $84bn compared to newspaper advertising which is expected to dip to $95bn globally from $101.5bn in 2009.

The agency said: "Confidence in the global economic recovery, while tentative, continues to grow, and this improvement has been apparent in ad markets across the world.

"Ad expenditure is accelerating bullish developing markets, while in the developed world the downturn is coming to an end more quickly than expected.

"This is our second upgrade in a row, and a much more solid one than the first, with a 1.3 percentage point improvement this time compared to a 0.4 point improvement in December."

The report chimes with forecasts from the likes of ITV, which signalled last month that the worst of the advertising slump may be over.

ITV predicts a 20 per cent improvement in advertising revenues this month compared with the same period last year.