Forrester European Ad Spend Outlook Is Relatively Optimistic

Growth in European online ad spend will slow to 10 percent in 2009, down from a figure of 30 percent annual growth in 2007, according to Forrester Research’s “European Online Advertising Through 2013” report, released earlier this week.

Despite the gloomy forecast however, Forrester’s outlook is actually relatively optimistic compared with recent predictions from firms such as WPP’s GroupM, Enders Analysis, and E-Consultancy, all of which have anticipated year-on-year growth of well under 10 percent.

“From our conversations with industry and our own analysis of the numbers, we just don’t have the same level of pessimism as some of the other forecasters,” Nate Elliot, the report author and a principal analyst at Forrester, told ClickZ News. “Online will be hurt, just with all channels during a recession, but the fact is that online is in a better position than offline.”

As financial woes sink their teeth further into ad budgets, display is set to bear the brunt of potential cutbacks, as advertisers turn to the accountability of direct response channels, in particular search, to justify their spend, the report says.

Despite this, Elliott suggested that dwindling demand and falling inventory costs will in fact create opportunities for savvy advertisers. “Rather than abandoning display, we encourage advertisers to look for good-value. Advertisers will have the opportunity to buy up inventory at low prices and apply targeting to it. Tools such as ad optimization, and features available through social networks are often under-used,” he said.

Helping to offset this decline in traditional display formats, advertisers will increasingly turn to rich media and video, which will grow to account for around 60 percent of European display spending by 2013, the report predicts. Additionally, the improvement of programs such as Google’s AdSense should help drive spend through contextual formats.

“People are making assumptions based on the downturn of 2002, but display, and online as a whole are in a different position now. After the last downturn, online bounced back faster than offline, and it’s in better shape today than it was then. We’re not too pessimistic,” Elliott concluded.