Key advertising report downgrades global forecasts

LONDON, Oct 7 - Spending on global advertising is expected to grow 4.3 percent in 2008, less than initially forecast, with developed markets such as north America the hardest hit, a new report said on Tuesday.

Media planning and buying firm ZenithOptimedia said the forecast of 4.3 percent was down from the 6.6 percent growth predicted in its June report. World adspend growth for 2009 has also been downgraded to 4 percent from 6 percent.

The report said developed markets would be hardest hit by the reduced liquidity in the financial markets, with growth forecasts for 2008 and 2009 cut by half in north America and western Europe.

The report said developing markets' growth rates were lower but still healthy while Internet advertising was still strong, growing at 23 percent a year and forecast to account for 13.8 percent of world advertising spend in 2010.

"The reason for the downgrade is primarily the financial shock caused by the bank failures ... which has spread uncertainty and undermined confidence in the wider economy," the report said.

"The bank failures will have a fairly small direct effect on ad expenditure -- since financial advertising contributes only about 4 percent of global ad expenditure -- but fears for the future will cause consumers to cut their spending, while companies carefully inspect their budgets to find cost savings."

ZenithOptimedia said luxury goods, travel and entertainment were likely to be the sectors most affected.