BRICs and sports will help global advertising revenues to grow in 2012, according to an updated report by MAGNAGLOBAL, a division of IPG Mediabrands. The study furnished this columnist revealed media owners’ revenue growth for 2012 to be slower than previously projected, but still resilient.

For 2012, media owners’ advertising revenues is forecasted to grow by 5.0 percent to $449 billion, 1.5 percent below last year (6.5 percent).

This downward revision is due to deteriorating macroeconomic perspectives. The forecast model is based on current, official economic forecasts that are generally predicting weaker—but still positive—growth this year. However, the uncertainty remains high, especially in Europe. In September, the IMF reduced its global output forecast (real GDP growth) from +4.5percent to +4.0 percent.

Although that forecast suggests the world economy would still grow, it is an awkward average between emerging economies that are growing at healthy rates and developed economies that are still sputtering (average +1.9 percent, US: +1.8 percent). In late November, OECD revised its own global output forecast to +3.4 percent (including +1.6 percent) for OECD countries and only +0.2 percent for the Euro area) warning that 4Q11 and 1Q12 could tip negative in most European countries, in line with 3Q11 slowdown. Greece, Italy and Portugal, in particular, are now expected to suffer full-year recessions in 2012. Other economic indicators (industrial production, personal consumption and business confidence) have been similarly downgraded in recent months and some independent forecasters have expressed increasingly gloomier views.

Despite the worsening economic outlook, a positive growth rate is projected based on a few factors:

First, the well-known “quadrennial” cyclical driver is back, and it will be stronger than ever. The incremental ad spend generated by major sporting events (London Summer Olympics, Poland/Ukraine European Soccer Championship) and the US presidential elections will bring an additional 1 percent to 2 percent on top of organic revenue growth across markets. In the US, political and Olympic (P&O) money will account for $3 billion of incremental ad spend, mostly on television ($2.4 billion related to the elections, $600 million generated by Olympic broadcasts). Meanwhile, major sporting events will help in European markets that are otherwise hit by economic stagnation, such as the UK (which is hosting the Olympics, although the games are broadcast on the ad-free BBC) and Italy (where the games and soccer tournament will mostly be broadcast by RAI, one of the few European public television groups still allowed to carry a full, all-day advertising load).

Second, big emerging countries will increase their share of global economic and advertising influence. At the end of 2012, emerging markets will represent 24 percent of global advertising revenues (compared to 7 percent in 1999) and the four BRICs alone will account for 14 percent (compared to 3 percent in 1999). Adding scale to dynamism, the BRIC markets have the capacity to offset part or all of the Western weakness. The four BRIC markets equated to only 10 percent of Western Europe’s advertising revenues in 1999. That ratio will grow to 59 percent by the end of 2012, and by 2016 the BRIC countries will almost match the size of Western Europe (94 percent). The BRIC countries contributed to 45 percent of the global market growth in 2011 ($9 billion out of $19 billion). With a growing proportion of the BRIC countries’ population accessing mass media, digital media and Western-style consumption patterns; with Western and local brands competing to position themselves in the top of mind of that emerging middle class, media demand is in excess of supply and inflation reigns. BRIC countries lag behind the global average advertising spend per capita ($80)—Russia: $70, Brazil: $60; China: $21, and India: $4. With such structural factors, it is expected that advertising spending and revenues in those markets will keep growing faster than the general economy, supporting global revenues in their wake.

Thirdly, some lessons learned in 2009 may help avoid a replay. Some major advertisers, e.g., in FMCG, have since admitted that they may have over-reacted back then by cutting advertising expenditure too hard too quickly, which harmed their brands. This time, even if sales forecasts are being revised downwards, marketers will remember that market shares are still up for losses or gains, including—and perhaps even more so—during a recession, as consumers reconsider their choices. Besides, the Western advertising market is still smaller than five years ago, which means prices and net costs per thousands—despite some inflation in 2010-2011—are still competitive and attractive by long-term standards. Therefore, brands in various sectors have both the incentive and capacity to invest smartly to boost or defend their market shares.

In terms of media market share, the Internet will grow by 11.2 percent and outrank newspapers to become the second-biggest media category globally, accounting for nearly 20 percent of global advertising dollars (19.5 percent at $87.4 billion). The category already stands at 23 percent in both North America and Western Europe (where it even takes the No. 1 spot in a few markets, such as the UK). Television will receive the bulk of the “quadrennial” bonanza and benefits from the typical concentration of advertisers into leading media at the expense of secondary media during harsh times. TV will grow by 6.7 percent globally to $187 billion.

Newspaper and magazine revenues will shrink by an average -1 percent and -1.3 percent respectively, with much deeper drops in Western markets, where circulation losses of 2011 will be reflected in 2012 ad pricing. Radio will grow by 2.2 percent to $30.4 billion. OOH will also benefit from the “quadrennial” events and the roll-out of new digital (+6.3 percent to $28.3 billion) platforms. In the UK, the innovative upfront auction process conducted last summer to allocate the most premium London inventory during the Games did not quite meet the high expectations, but the industry is still expected to grow healthily this year.

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Bubuwit Squeaks

Let your enemies talk

This major marketing company has “save” reps who are paid to handle complaints. The “save” reps are trained to allow irate customers to vent their anger—shouting at the rep is tolerated, up to a point, because reps know that the customer is angry with the situation, rather than the company (and certainly not the rep). Once the customer has ranted for a while, he or she usually calms down and a reasonable dialogue can be conducted. The reps don’t get emotional themselves—this is just business!