Global Ad Expenditures Still Accelerating.

According to Zenith Media's New Global Advertising Expenditure Forecast, worldwide ad spending grew to $300 billion last year and continues to rise.

* Zenith Media expects 4.6 percent growth in global ad spending in 1999 after inflation (constant prices), an upgrade on our 3.9 percent July

* The second half of 1999 was generally stronger than the first, and renewed confidence has invigorated the ad market. There has also been an injection of spending from e-commerce companies--the 'dot.coms'--racing to establish brands first in the U.S. and now Europe.

* The worldwide economy is expected to gather pace in 2000, led by exceptional strength in the U.S., promising three steady years of advertising growth.

* World consumer price inflation is forecast to start rising next year, so 1999 will probably have been the peak for constant-price growth in advertising. We still expect advertising spending to grow faster than output as a whole, so advertising's share of the global economy should keep growing. This was 0.96 percent in 1995 and 1.01 percent in 1998; we forecast 1.05 percent by 2002.

The USA's consumer boom of recent years has, drawn rising investment into advertising. America took 43 percent of world ad expenditure in 1998, and we forecast it will take 44 percent in 2002--more than the 13 next largest markets combined.

Zenith expects exceptional growth from new media companies, with sector spending tripling in 2000. This coincides with the 2000 'quacirennial'--tne presidential and congressional elections and Sydney Olympics--with political advertising already well underway. But all these are just parts of the much bigger picture of a vibrant ad market in a thriving economy.

Network TV is losing share of audience and revenue, mainly to cable, but still growing thanks in large part to new media branding and heavy auto investment: Cable's revenue share is heading from 12 percent in 1996 to 19 percent by 2002 thanks to bigger ratings and better organization. Spot-local is a natural draw for quadrennial election advertising; spot-national stands to benefit most from airtime sales consolidation across larger groups of stations.

Spot radio gets 95 percent of radio spending, and should grow well in 2000 as it is popular with new media and political advertisers. Magazines have taken a good slice of 'dot.com' action due to national reach and editorial environment--qualities appreciated by the booming healthcare business.

Zenith expects newspapers to grow between 5 percent and 6 percent a year to 2002. The Internet will chip away at classified revenues, but we do not yet envisage an Internet land-grab.

Other points:

* Ad expenditure in Asia-Pacific should have grown 3.6 percent in real terms in 1999 now that all the major economies have resumed growth and countries like South Korea and Malaysia look strong. But Japan's structurally flawed economy is keeping regional ad growth below the world average because it absorbs such a large proportion of regional spending: 61 percent in 1998.

* But for Japan, Asia-Pacific should have grown about 11 percent at current prices in 1999, and 9 percent-10 percent each year for the next three years. This means Japan's regional influence over advertising will decline, and all the more so given the prospect of 50 percent growth in spending from China between 1998 and 2002. Japan's share of the market should be down to 53 percent by 2002.

* Europe cheated the recessionary gloom fashionable in 1998. The U.K. enjoyed a softer landing than expected: Germany and Italy are picking up. We expect the gap between the European and Asian ad markets to widen from 1998 to 2002, but think Europe will grow fractionally slower than the U.S.

* The devaluation of Brazil's Real led to a crisis of confidence in Latin American markets in 1999. We think advertising spending will have declined 7.7 percent. But governments have won praise for their quick economic reactions, and fundamentals are generally fairly sound, so ad spending should resume sustainably strong growth in 2000.

* The Internet is well on the way to establishing itself as a complementary advertising medium in Europe and the Americas. But in other parts of the developed world--Japan, for example--it is yet to make much of a dent on the market. In sum, the Internet is unlikely to have grown beyond 4 percent of world advertising by 2002.

John Perriss, chairman and chief executive of Zenith Media Worldwide, commented:

"Advertising is working hard. Economic conditions in the West are ideal for advertising growth, and the East is out of recession and recovering well. The need to advertise has never been greater. E-commerce is a classic example of the imperative to educate, persuade, and differentiate. We know every boom must end, but the outlook is still good. We are confident of solid advertising growth over the next few years."

Advertising Expenditure Forecast is published twice a year. It may be ordered from www.zenithmedia.com.

                   WORLD ADVERTISING EXPENDITURE SUMMARY
                      (US$ million at current prices)
                          1998           1999    2000    2001    2002
                      Major media
                   (TV, press, radio,
                    cinema, outdoor)
North America           121,998       130,575 139,592 147,981 156,296
Europe                   79,480        84,262  89,475  94,934 101,035
Asia/Pacific             54,240        56,262  58,964  62,273  65,869
Latin America            23,153        21,375  22,968  24,785  26,308
Africa/M. East/ROW        6,763         7,204   8,059   8,819   9,737
Total                   285,635       299,678 319,059 338,790 359,245
                       YEAR-ON-YEAR CHANGE (PERCENT)
                 1999 v 1998              2000 v 1999          2001 v 2000
                    Curret       Constant   Current   Constant   Current
                    Prices        Prices    Prices     Prices    Prices
                 Major media
              (TV, press, radio,
               cinema, outdoor)
North America        7.0           4.8        6.9       4.5        6.0
Europe               6.0           5.0        6.2       3.9        6.1
Asia/Pacific         3.7           3.6        4.8       3.3        5.6
Latin America       -7.7            -         7.5        -         7.9
Africa/Middle        6.5            -        11.9        -         9.4
East/ROW
Total                4.9           4.6        6.5       4.1        6.2
                       2002 v 2001
              Constant   Current   Constant
               Prices    Prices     Prices
North America   3.5        5.6       3.0
Europe          3.6        6.4       3.9
Asia/Pacific    2.8        5.8       2.6
Latin America    -         6.1        -
Africa/Middle    -        10.4        -
East/ROW
Total           3.4        6.0       3.0
NB: Constant price changes cannot be calculated for Latin America,
Africa, Middle East and the Rest of the World due to past
hyperinflation. Hungary, Poland, Russia and Vietnam are
also excluded for the same reason.

* North America will be the fastest-growing region in 1999 Asia Pacific will grow again but will be held back by Japan; Latin America in temporary decline.

* Zenith forecasts that growth will acccelerate to 6.5 percent in 2000 and stay above 6 cent in 2001 and 2002 but rising world inflation many slow underlying growth rates.

* Television is expected to consolidate its lead as the main advertising medium between 1998 and 2002 with market share rising from 38 percent to 41 percent thanks to 30 percent growth in spending.