Global ad industry hits buffers

But ad spending is, according to forecaster Zenith

The global advertising industry will this year put in its worst performance since the recession of the early 1990s, a report on the website of the Financial Times newspaper has said.

Worldwide advertising will grow by an "almost negligible" 1.4% this year, the report said research published on Monday by media forecaster Zenith Media would say.

This represents a decline of 1.4% after adjusting for inflation and suggests a sudden slump in the global ad trade.

As recently as April, Zenith was forecasting global advertising growth of 4.8%.

"Dot.com failure, falling stock indices and sudden profit pressure have shaken business confidence more than we had expected," the report quoted Zenith as saying.

US suffers most

Economists commonly keep an eye on advertising spending levels as an early indicator of wider economic conditions.

Companies are often quick to slash advertising budgets at times of uncertainty while any economic slowdown usually takes longer to feed through to changes in consumer behaviour.

According to the Financial Times, Zenith says companies are cutting advertising budgets because higher labour and energy costs and the end of the technology boom have caused corporate profits to plunge.

Zenith says the United States advertising market will suffer the worst slowdown.

It predicts a decline of 2% in ad spending (or 5.1% after inflation) this year.

"The US influence on advertising cannot be overstated: It is home to 43% of the world's advertising spend and to most of the world's international advertisers," Zenith will say.

"Every other advertising market feels its influence."

Exceptional

After the US comes the UK, which is expected to see a decline in ad spending (including advertising on the internet) of 0.5%.

Zenith predicts Europe's market will grow 3.6%, down from the April forecast for 5.9% growth.

It says this year's figures make grim reading partly because last year's were so exceptional.

Under its latest forecast, 2001 ad spending will still be 12% higher than 1999's.