It’s time to add some more global advertising gloom to the collapsing domestic ad market that has savaged the mainstream media.

Group M, the buying arm of the world’s biggest ad agency group WPP, says the advertising downturn will deepen over the rest of 2009 and in 2010.

Global advertising spend will fall 4.4% this year to $US425 billion. This is much deeper than the forecast last year of a fall of 0.2% and comes after a 3% rise in 2008 spending — despite the slowdown late in the year.

The Australian market will see a 1.7% fall this year to $US7.778 billion (around $A11.3 billion).

Group M says the US faces a 4.3% fall this year to $US155 billion and a further 6.8% drop next year. Full details of the 2010 forecast will be released in a couple of months.

Japan will see a 10.5% slump this year, the UK, 11.2%, Spain, almost 14% and Russia a massive 22.8% as the recession bites deep in these markets.

Brazil will see a rise of 10.5%, India, 6%. China will see a rise of 3.2% this year, sharply lower than the 13% growth forecast last December.

The Group M forecasts follow last week’s prediction by Carat, owned by Aegis, that global ad spend would fall 5.8% this year, but recover to grow 0.7% next year.

Adjusting for inflation, Group M said its forecast equates to a 7% fall, compared with a 1.6 per cent real decline last year. That is much deeper than any global growth forecasts from the World Bank 1.7% (seasonally adjusted), the IMF and the OECD.

Group M Futures Director, Adam Smith said in a statement:

This contrasts with prospective global economic growth of perhaps zero this year, and follows a real fall of 1.6 percent in 2008 global advertising. The 2008/2009 period is now a more serious advertising recession in scale, duration, and relative to the global economy, than the extraordinary 5.1 percent real-terms post-dotcom global advertising correction of 2001.

On this basis, the fall in Australia would be 5.1% — much deeper than the 1% contraction in economic growth (seasonally adjusted) expected by many analysts.

But for Fairfax Media the gloom continued in march with Goldman Sachs JBWere’s monthly page count showing “a continuation of the current soft trends, despite the more favourable prior comparable period (i.e. March 2008 included the Easter holiday weekend)”.

Our count of the average weekly number of pages across Fairfax’s main metros (SMH, The Age, AFR) fell 15% in March, and indicated the rate of decline continues to worsen (c.f. Feb-09 -11%; Jan-09 -6%; and Dec-08 -3%). The soft page count remains driven by severe deterioration of the average number of classified pages, with March down 47% (c.f. Feb-09 -41%; Jan-09 -40%; and Dec-08 -38%).

In related news, today the newly established The Newspaper Works released unaudited industry revenue figures for the Australian newspaper market. The data indicates the market fell 0.6% in CY08, with a 4.2% fall in classifieds, offset by a 2.0% gain in display (National +1.9%; Retail +2.1%).

With market growth of 2.9% reported by CEASA for 2H08 (classifieds +2.8%, display +2.9%) the data implies the market fell approximately 4% in 1H09 (classifieds -11%, display +1%). This is broadly in line with the 4.2% decline we estimated post the February reporting season.

Peter Fray

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