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Spending on advertising predicted to slow in '09

Associated Press / October 8, 2008
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NEW YORK - A leading advertising forecaster sharply lowered expectations yesterday for ad growth, blaming an uncertain economy for reduced spending through next year.

ZenithOptimedia said the recent bank failures are only indirectly responsible since advertising for financial services makes up only about 4 percent of global ad expenditures.

"But fears for the future will cause consumers to cut their spending, while companies carefully inspect their budgets to find cost savings," the British ad company said in revising its projections.

Even before the latest economic troubles, retailers and car dealers have been cutting spending in anticipation of lowered sales, while employers have placed fewer help wanted ads as they trim payrolls.

Uncertainty from the bank crisis will only exacerbate pressures on the ad market, particularly among companies that provide nonessential goods or services like travel, entertainment, and luxury products, ZenithOptimedia said.

ZenithOptimedia now expects ad spending in North America to grow 1.8 percent in 2008, compared with last year. That's down from the 3.5 percent the company had forecast in June.

Ad spending should grow 0.9 percent in 2009, compared with this year, down from the previously expected 2.7 percent.

ZenithOptimedia expects improvements in 2010 with a projected year-over-year growth of 3.9 percent.

European and worldwide forecasts also were lowered. Although the developed markets are expected to be the hardest hit, ZenithOptimedia said the rest of the world still is vulnerable because of budget cuts by multinational companies.

The new forecast came as the Interactive Advertising Bureau and PricewaterhouseCoopers LLP said US Internet ad revenue fell slightly in the second quarter from the previous three-month period.

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