GroupM forecasts U.S. Ad Spending to increase.

Advertising spending in U.S. measured media is expected to show almost a four percent gain in 2008 compared to the previous year, when spending was up about three percent, according to a new study from GroupM. The forecast is unchanged from the company’s previous projections earlier this year.

The study, “This Year, Next Year” is part of GroupM’s media and marketing forecasting series drawn from data supplied by holding company WPP’s worldwide resources in advertising, public relations, market research, and specialist communications. The study included an examination of all major media and took into account a wide variety of factors including the subprime mortgage credit crisis and the current strike by the Writers’ Guild of America.

The report said U.S. advertising spending is expected to show a 3.7 percent increase to $168.6 billion in 2008. At the same time, spending in 2007 is expected to come in at 2.8 percent higher than in the previous year. Worldwide spending, meanwhile, is expected to go up 7 percent to $479 billion in 2008 following an anticipated 6 percent increase in 2007.

GroupM Futures Director Adam Smith, who oversees all “This Year, Next Year” reports, identified television and the internet as the primary engines of global ad growth with 50 percent and 30 percent, respectively, of additional new investment in 2008. He also said spending on marketing services such as sponsorships and public relations is growing at a faster rate than it is for traditional advertising.

Smith also reported that five percent of global ad investment is expected to shift from developed to emerging economies in 2008, the largest such shift ever recorded.

“The main geographic contributors to growth next year are predicted to be China, with 21 percent of all new money, and Russia and Brazil with each contributing six percent,” said Smith. He added that India will account for three percent and the U.S. remains the second-highest contributor at 20 percent. “This eastward shift is a form of ‘advertising arbitrage’ in which traditional media dollars are moving to the place where they can do the most good,” Smith said.

The report also predicted the following:

o Next year’s spending expectations largely reflect the Olympics and the U.S. election. It is anticipated that the Games will bring $1 billion in ad spending to national TV and $200-$300 million to local broadcast. The election is even more important to local broadcast and is expected to inject nearly $2 billion in 2008 before facing a tough adjustment in 2009.

o Internet ad spending is expected to exceed 10 percent of global ad investment in 2008 for the first time ever, and search will comprise 65-70 percent measured online advertising in 2008, up from 50% in 2005. Another first, in one country-Sweden-online advertising is expected to be the largest single medium. The U.K. and Denmark are likely to be the next in line.

o The Writers’ Guild of America strike is not expected to impact U.S. ad spending. It is anticipated that spending will follow the viewing audience and shift from network to cable and possibly spill over into other media if demand causes inflation in cable. However, a prolonged strike could delay pilots and thus impact the 2008 upfront marketplace. An upfront delay would add to uncertainty and nervousness, but might force broadcasters into innovation with new formats.

o Advertising spending in newspapers is expected to continue to suffer and new softness is already evident in some large categories such as automotive, airlines, and retail. But the continued heavy loss of classified advertising to the internet continues to do the most serious damage.

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For more information at http://www.groupm.com