A leading media buyer will downgrade its 2008 advertising growth forecasts for Western Europe and North America today, wiping $600 million (£301 million) from previous predictions as concerns over the credit crunch hit marketing budgets.

ZenithOptimedia, the media buying arm of Publicis, the French advertising group, will announce that its advertising spend in North America will grow by 3.5 per cent, not by 3.7 per cent as previously thought, stripping about $400 million off its forecasts in March. Growth forecasts for Western Europe have been downgraded from 3.9 per cent to 3.7 per cent, about $200 million less than expected.

Jonathan Barnard, the head of publications at ZenithOptimedia, said: “The credit crunch continues to worry investors, consumers and advertisers in Western markets, so we have downgraded our forecasts. High energy and commodity prices are stoking inflation, so real growth - after adjusting for inflation - is unlikely to exceed 1percent in either region.”

However, ZenithOptimedia paints a much brighter picture for developing advertising markets. The media buyer will say today that advertising spend outside North America and Western Europe will grow by 11.8 per cent over the course of the year, nearly 1 per cent more than it had predicted in its March forecasts.

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“After earlier export-led expansion, domestic consumption is assuming growing importance in developing-market economies, providing fertile ground for advertisers to establish and expand their brands,” Mr Barnard said. ZenithOptimedia will say today that it expects the world advertising market to grow by 6.6 per cent this year, well above the 5.2 per cent rate at which it has grown over the past ten years.

Zenith is expecting strong world growth in 2009 and 2010 on the back of continued growth in Asia Pacific, Central and Eastern Europe, the Middle East and Latin America.

The group will also raise its growth forecasts for the internet advertising market, saying that the medium will attract 13.6 per cent of all advertising by 2010, well ahead of its 12.3 per cent prediction in March, and that it will grow by 26.7 per cent this year.

“Internet ads are cheap, easy to target and customise to particular audiences,” Mr Barnard said. “The quality and quantity of online video is improving all the time, and audiences for full-length films and television programmes - and the ads that surround them - are growing rapidly.

Revised view

3.5%

Growth of spend in North America, down from 3.7 per cent

3.7%

Growth of spend in Western Europe, down from 3.9 per cent

11.8%

Growth of spend in developing markets, up from 10.8 per cent

Source: ZenithOptimedia

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