In a new report, Barclays Capital is calling 2012 a “low growth environment” for the ad agency business. The financial firm is forecasting that agency organic revenue growth next will average 2.9%, down sharply from the 5.6% that the firm believes agencies will achieve in 2011.
Barclays also cited what it termed the “Wal-Mart Effect” on advertising, which it described as the shift of ad dollars from local to national media, as big marketers continue to seek greater efficiencies from their marketing budgets.
“National advertising has been gaining share of the total spending pie steadily since 1980, driven by the consolidation of media and advertising companies, not to mention the consolidation of corporate America,” the Barclays report stated. “We expect national advertising will represent approximately 38% of total U.S. advertising expenditures this year, up from 25% in 1980. Local advertising has lost 19 percentage points of share during this time.”
The firm reiterated its total U.S. ad spend growth projections for 2011 and 2012 of 1.4% and 4.0% respectively, which in both cases, is below the firm’s estimates for U.S. nominal GDP growth of 4% and 5%.
Those forecasts are directionally in line with other recent ad spend predictions. Publicis Groupe’s ZenithOptimedia, for example, estimates that 2011 U.S. spending will be up 2.2%, while 2012 growth will reach 3.5%.
Those forecasts are directionally in line with other recent ad spend predictions. Publicis Groupe’s ZenithOptimedia, for example, estimates that 2011 U.S. spending will be up 2.2%, while 2012 growth will reach 3.5%.
