It looks like while US ad spends will drop again in 2010, but global ad spend is on the rise. And the two main drivers of this growth, are digital and developing markets. However, it also looks like a lot of that growth might escape publishers and ad networks.

Unbalanced Growth

Late last week, Ad Age reported that Group M projects global ad spending to increase by 3.5 percent or $451 billion in 2010, up from a previously estimated 1 percent. Part of this is how digital has had a bigger part of ad campaigns in general, and is expected to drive even more growth next year:

“What continues to power the medium is the steady advance in creativity, analysis and technology, which embeds digital in almost all marketing activity,” [said Adam Smith, futures director of Group M]. “Measured internet added two points of global ad share in each of 2007, 2008 and 2009 and we think it will sustain a rate of one point a year this year and next, to reach 16 percent in 2011.”

But developing markets are also integral to this growth in global ad spend, with China, Indonesia, India, Brazil, and Russia (not the US) leading the charge:

“China remains the world’s biggest contributor to ad growth in 2010, accounting for one in three of all net new ad dollars we expect this year, and one in five as the rest of the world catches up in 2011,” Mr. Smith said. “Indonesia and India are the next biggest contributors from Asia. Our grouping of ‘new world’ countries accounts for 34% of the global economy this year and 30% of measured media investment.” [emphasis my own]

US ad spend, on the other hand, are expected drop — but less than previously expected. US ad expenditures are expected “to decline 1.3% to $145 billion in 2010 from $147 billion in 2009,” an improvement over previous estimates of a 4.3 percent drop, and a decline of 7 percent in 2009.

Catch 2010

Even though advertisers will spend more on digital in 2010 (and 2011), it looks like most of that might go to agencies (and not publishers). Basically, most of the increase in ad spend might end up going towards production, rather than media buys.

During the Cannes Lion International Advertising Festival last week, when Unilver announced that it would double its digital spending this year. The world’s second largest advertiser, also doubled its spending in the US alone last year (as did its main competitor, Procter & Gamble).

But as Unilever CMO, Keith Weed explained, an increase in digital spend means more has more to do with production costs than media buys. As AdAge reported, even though:

Unilever did double its measured U.S. internet advertising last year [...] those figures miss large chunks of digital spending, including search, mobile, brand websites, most video ads and the cost of behavioral targeting or production for a large amount of digital media — which most recently included talent fees for the likes of St. Louis Cardinals first baseman Albert Pujols and New York Yankees pitcher Andy Pettitte [...]

So while digital seems poised to be the prodigal ad medium of 2010 (and 2011), not all of that stimulus will remain in the digital ecosystem. Rather, agencies and celebrity spokespeople might capture a lot more of those dollars than portals or ad networks.

Growing Pains

When the US government bailed out Wall Street, a lot of that money never made it to Main Street. Well, it seems like the ad industry is no exception.

The global ad marketing will likely exceed projected growth rates, but that growth will be uneven. Asian countries are leading that growth, while affluent economies, such as the US, continue to retract.

Similarly, a lot of that growth won’t make it straight to the digital economy. Rather than benefiting digital publishers and ad networks directly, a lot of the growth in digital publishing will be siphoned off to cover agencies fees and other production level costs.