The West may be heading into a double-dip recession, but global advertising spend is still forecast to rise by nearly five percent to $465.5bn in 2012 says International Advertising Association President
The West may be heading into a double-dip recession, but global advertising spend is still forecast to rise by nearly five percent to $465.5bn in 2012. International Advertising Association president Alan Rutherford says the best is yet to come for the industry.
Spending an hour in the company of Alan Rutherford can be a life-changing experience.
It makes you realise that whatever you have done, it probably isn’t very much compared to him. The biggest agencies, the biggest brands, and the giants of the digital advertising world are all notches on his belt. He even once fancied a stint in the Royal Air Force.
“You could say I like to move around a bit. Keeps me fresh, keeps me interested,” says the current president of the International Advertising Association (IAA). He can say that again — apart from the IAA, Rutherford is involved in a string of other media operations, including acting as advisory chairman to UAE-based agency Face to Face. With thirty years experience at the sharp end of media, he has become the go-to guy for problem solving. You want growth? You want to sell your company? You want to expand in digital? You want to monetise social media? Rutherford has developed a reputation for having the answers to most of the above.
“There’s a real buzz around the media world today; everywhere I go there seems to be an explosion of activity. And the great thing is, this is a fast-moving industry so the challenges are changing by the minute,” says Rutherford.
It certainly is a good time to be running the International Advertising Association. Originally founded in 1938 it has grown into a global network of 4,000 members, with 56 chapters in 76 countries. Following 3.8 percent growth in 2011, global advertising spending is expected to grow by 4.9 percent in 2012 to $465.5bn, according to the latest Global Advertising Forecast from Strategy Analytics. Global TV advertising is expected to grow by five percent in 2012 to $188.5bn, equivalent to 40 percent of all global spending. Global print advertising is expected to grow by half a percent, accounting for a 26.4 percent share. Other traditional formats including cinema and radio will grow by approximately four percent.
In contrast, global online advertising is expected to grow 12.8 percent to $83.2bn in 2012, accounting for eighteen percent of global ad spending.
There may be a double-dip recession in the West, but try telling that to advertisers. Ed Barton, Strategy Analytics’ director of Digital Media Strategies, explains, “Major global-impact events led by the Olympics, the US presidential elections and the European football championships, as well as Japan’s continuing recovery from the earthquake, combine to paint a brighter picture globally in 2012 for advertising spending overall. Furthermore, we expect that total ad spend will surpass half a trillion dollars in 2014.”
So where does Rutherford see the action happening? Not surprisingly, he points to the digital world, and the rapid growth of social media. “The challenge is how to monetise it,” he says. “Social media is great but people are struggling to monetise it. The interesting issue is when it becomes more commercial, what impact will it have on the consumer? When you think of social media at the moment, people feel relatively happy they have their own space. But look at MySpace; it died overnight when it became commercial. The trick is to make money but keep consumers happy. I think, I hope, the social media owners will find a way,” he says.
According to Strategy Analytics, US online advertising is expected to grow by 6.7 percent this year to $27.4bn compared to 3.7 percent for TV and 2.9 percent for other traditional formats. Print is expected to decline by 1.5 percent. In comparison, online advertising across Europe is expected to grow by 11.7 percent this year compared to 3.4 percent for TV and 2.4 percent for ‘other traditional’ advertising. Print is expected to decline by 0.1 percent.
But what about the Middle East? The jury is not just still out, but still split. Media barons such as Omnicom Media Group’s MENA CEO Elie Khouri have for the past two years been insisting the industry needs to “wake up” to the rise of digital advertising, suggesting not enough is being done. Rutherford says: “I don’t think all of the existing big agencies haven’t reinvested into digital. I think it is an issue in the Middle East, that many of the bigger names out there haven’t properly developed their digital capability.”
Article continued on next page