According to data by market research agency Zenith Optimedia, global spending on the advertising industry is likely to be comparatively lower than the initial forecasts due to challenging macroeconomic environment. The agency, owned by French advertising services provider Publicis Groupe SA ( PUBGY ), also made lackluster predictions for the advertising industry for the next two years.
The ongoing political tussle and tensions with Russia and western countries regarding control over Ukraine has forced Zenith to lower its growth predictions for the advertising industry for this year to 5.3%. Furthermore, simmering tension in Central and Eastern Europe, North America and the Middle East are expected to have a ripple effect on the growth trajectory of the industry. Consequently, advertising sales are likely to increase by 5.3% in 2015 and 5.9% in 2016.
The advertising spending in Russia is likely to be the worst hit this year with a paltry growth of 1.7% this year compared with double-digit growth on the trot since 2009. However, the industry is expected to benefit from positive economic strides in the U.S. - the largest advertising market with job improvements. Zenith forecasts total global media spending to reach $523 billion by the year end.
Headquartered in Paris, France, Zenith's parent company Publicis offers interactive communication services, online direct marketing consulting, social network expertise, e-commerce, search engine optimization, Internet ads, and various forms of Internet and mobile communication services. Its rivals in the industry include The Interpublic Group of Companies, Inc. ( IPG ), Omnicom Group Inc. ( OMC ) and WPP plc ( WPPGY ).
Publicis currently carries a Zacks Rank #4 (Sell). The company has mostly experienced a decline in its share prices after its failed merger attempt with Omnicom in May 2014. Putting aside the disappointment of the failed merger bid, Publicis is now focusing on digital deals to resurrect its fortunes and reinforce its position as a leading standalone advertising and communication services company.
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