Credit crunch to cut global ad spend growth

LONDON (Reuters) - Spending on advertising in north America and western Europe is expected to grow by 3.8 percent this year, lower than an earlier forecast of 4.4 percent, as the credit crunch saps confidence, a report said.

ZenithOptimedia, a media planning and buying firm, raised its 2008 forecasts in the rest of the world to 11.1 percent from 10.9 percent but said the credit crunch's impact trimmed its global growth forecast to 6.5 percent from 6.7 percent.

Earlier this month media network Carat, owned by Aegis (AEGS.L), cut its own forecast for growth in global ad spending in 2008 to 6 percent from 6.2 percent.

Zenith, a unit of France's Publicis (PUBP.PA), said it expects strong advertising markets in Asia, central and eastern Europe, Latin America and the Middle East to generate above-trend growth globally in 2009 and 2010.

The fastest-growing markets for ad spend between 2007 and 2010 are expected to be Russia and China with growth of 92.1 and 61.5 percent respectively.

Although China's ad market is 8 percent of the size of the U.S. market, it is expected to rise from the fifth to fourth-largest market by 2010, while Russia is seen jumping to sixth from eleventh.

Zenith said it had again substantially raised its forecasts for internet advertising. By 2010, the company forecasts such spending to hit $67 billion (33.7 billion pounds), up from $61 billion previously.

It added that cinema and outdoor advertising were the only media apart from the Web to gain market share.

U.S. cinema advertising is benefiting from new digital distribution technology, which cuts production costs and helps advertisers target local campaigns more effectively, Zenith said.

(Reporting by Gavin Haycock; Editing by Quentin Webb)