Markets

GroupM Forecasts Advertising Recession Will Last Until 2011

By Jim Edwards

Updated on: June 25, 2009 / 3:53 PM EDT / MoneyWatch

WPP's GroupM, the world's largest media buyer, said yesterday it expected to see continued declines in media spend through 2010. The forecast, by GroupM futures director Adam Smith, poured cold water on a NY Times article that suggests the agency business is poised for recovery.

Omnicom's CEO of Diversified Agency Services Thomas L. Harrison told the Times that he believed the agency business was no longer about "managing in a downturn," but "leading toward the upturn."

Perhaps not. Here's what GroupM's Smith told BMO Capital Markets he thinks will actually happen to adpsend:

Global spend: -5.5% in 2009, and -1.5% in 2010.
U.S. spend: -4.3% in 2009, -6.5% in 2010.

Smith also told BMO the U.S. TV upfronts should bring in 10% less revenue this year (driven by lower audiences) with CPMs coming in flat, according to a note to investors by BMO's Dan Salmon. GroupM buys over $60 billion in media, and thus has a pretty good database of spending info to draw upon.

The news dovetails nicely with something BNET noted on June 20, that WPP chief Martin Sorrell's people seem to be prepping the market not to expect much good news in his Q2 numbers. Ad Age notes that Publicis Groupe's ZenithOptimedia forecasts a similar set of declines.