Recent forecasts by leading media companies and industry consultants suggest that the worst of the recession in the advertising and marketing industry may be over. However, many of the same forecasters are saying that the growth of advertising spending will be painstakingly slow over the next five years.
According to Publicis Groupe's ZenithOptimedia, North American advertising spending will decline from $157 billion in 2009 to $153 billion in 2010. WPP's GroupM estimates that spending will fall from $155.8 billion in 2009 to $149.6 billion in 2010. Longer term, Interpublic Group's Magna projects that U.S. media-supported advertising revenue will grow at a compound annual rate of only 1.2 percent between 2009 and 2014
Meanwhile, Winterberry Group, a management consulting firm specializing in the advertising and marketing services sector, is seeing a continuing shift in marketing spending from traditional "above-the-line" advertising channels (television, radio, newspapers, magazines, etc.) to "below-the-line" direct and digital channels (direct mail, teleservices, digital, etc.). In October, the firm estimated that above-the-line spending in the U.S. would total $128.4 billion in 2009 and $126.4 billion in 2010, while below-the-line spending will grow from $149.9 billion in 2009 to $152.6 billion in 2010. Winterberry Group also estimated that spending on direct mail in 2010 will be essentially flat compared to 2009, while spending on digital marketing in 2010 will increase by 8.7 percent compared to 2009.
Marketers are also becoming a little more optimistic about marketing spending in 2010. In a recent survey of business-to-business marketers conducted by BtoB magazine, 39.2 percent of respondents said they plan to increase marketing budgets in 2010; 47.5 percent of respondents plan to hold marketing budgets at 2009 levels; and 13.3 percent plan to decrease marketing budgets in 2010. This represents a significant improvement over 2009, when 57.7 percent of survey respondents cut their marketing budgets.
Based on this as well as other recent research, it appears that overall advertising and marketing spending will grow only slowly over the next few years. There are at least two reasons that spending will be restrained. First, with the overall economy expected to recover slowly from the "great recession," it's difficult to see how marketing spending can increase rapidly. And second, marketers will continue to shift spending to less expensive and more measurable marketing channels and tactics. So, spending on digital marketing channels and tactics is likely to grow much more rapidly that overall advertising and marketing spending.