Online is faring better than most, of course. Zenith is predicting that online’s share will rise from 8.6% last year to 13.8% by 2010 – a slight uptick from its last forecast of 13.6%.

This year, global ad spend in general is expected to grow 4.3%, down from the original forecast of 6.6%. 2009’s forecast has also been downgraded, from 6% to 4%.

Microsoft, Google’s DoubleClick, Yahoo and AOL’s Platform-A will provide the tools to enable clients to connect with their audience of choice – from moms to dog owners – in one campaign buy across multiple networks, unifying the wildly fragmented environment of ad networks, exchanges and direct publisher relationships.

The network will work out of the VivaKi Nerve Center, which uses services from Publicis’ Digitas, Starcom MediaVest, Denuo and ZenithOptimedia.

Publicis has been reshuffling its execs for the past few months and the VivaKi announcement seals several deals. Jack Klues and David Kenny, currently members of Publicis’ management board, will lead VivaKi. Starcom’s chief digital officer Curt Hecht will be president.

Kenny, previously the CEO of Digitas, will be officially replaced by Laura Lang. Renetta McCann, the erstwhile CEO of Starcom will spearhead VivaKi’s talent-development platform. Laura Desmond, Steve King and Rishad Tobaccowala will continue to lead Starcom, Zenith and Denuo. They all report to Publicis CEO Klues.

The changes highlight Publicis’ commitment to digital advertising — initiated in 2006 with the $1.3 billion buy of Digitas.

In its first forecast of the year, Zenith upgraded its forecast for interactive advertisers, saying it will account for 12.3% of the ad market this year, up from 11.5%.

•    Zenith once again substantially increased its forecasts for Internet advertising:
o    Internet ad expenditure by 2010 is forecast to reach $67 billion (up from $61 billion in the previous forecast) and account for 12.3% of the ad market (up from 11.5%).
o    Online video and local search are now generating substantial new revenues; in the slightly longer term, behavioral targeting on social-networking sites is expected to provide fruitful opportunities to advertisers.

•    Some of the Internet’s growth is coming at the expense of newspapers:
o    Newspapers are forecast to grow only 4% over the forecast period. After adjusting for inflation, this equates to a 5% decline in expenditure.
o    Advertising on newspapers’ websites is included in internet advertising and is helping newspaper publishers claw back some of their lost revenue.

•    Cinema and outdoor are the only media apart from the Internet to be gaining market share:
o    Cinema is growing rapidly in the US, where it is still quite new, and is benefiting from the spread of digital distribution technology, which is reducing production costs and allows advertisers to run time-sensitive campaigns and target local areas more easily.
o    Digital technology is likewise enhancing the value of outdoor to advertisers, as is contractors’ investment in research and improvement of non-digital displays.
Zenith downgraded its combined growth forecasts for North America and Western Europe to 3.8% from 4.4%, blaming the credit crunch and ebbing consumer and business confidence for the slowdown. But Zenith upgraded its forecasts for the rest of the world to 11.1% from 10.9%.

Other key highlights from Zenith’s report:
•    Developing market dynamism will maintain global ad growth above 10-year average despite sluggish growth in the developed world.
•    Developing markets will contribute 63% of ad expenditure growth between 2007 and 2010, and increase their share of the global ad market from 27% to 33%.
•    Asia Pacific will overtake Western Europe in 2010 to become second-largest ad market.
•    Internet will account for 9.7% of world ad expenditure this year and 12.3% in 2010

Zenith’s Top 10 contributors to global adspend growth from 2007 to 2010:

Country         Growth (US$million)         Growth (%)
USA                   14, 812                                        8.3
China                9,242                                          61.5
Russia              8,248                                           92.1
U.K.                   4,541                                           19.5
Brazil               4,520                                          46.6
India                3,163                                           52.2
Japan               2,347                                           5.7
South Korea  2,095                                           21.6
South Africa  2,095                                          21.6
Pan Arab         1,987                                           54.2

Softness in the economy also will likely drive more money to the Internet, which can be cheaper than other media and has a reach that is easier to measure, which is attractive to advertisers in slower times. Merrill Lynch predicts overall ad spending in the U.S. for 2008 will grow 2.3%, while the portion of that spending on the Web will increase 18%. Publicis Groupe’s ZenithOptimedia says it expects the amount spent on Internet advertising to overtake spending on radio in 2008, and spending on magazines in 2010.

Amid this transformation of the ad industry, here are five trends to watch in 2008:

• New structure: The Web has fueled marketers’ frustration with the lack of collaboration inside the ad holding companies that dominate the industry. Specifically, marketers want more cooperation between the executives who create ads for TV and newspapers and those who craft Web ads or perform less glamorous tasks such as researching consumer behavior.
 
Many advertisers complain that ad executives too often push agendas that will most help their own bottom lines and tend to favor certain types of media, such as TV. Advertisers want a “media-agnostic” approach, one that picks whatever medium is best for the ad campaign.

Some bigger marketers have taken matters into their own hands during the past year. Procter & Gamble, Dell and Johnson & Johnson each have tried — working with ad holding companies — to create new types of ad groups that blend different functions. In 2008, pressure from marketers on this issue is likely to intensify, forcing even more change in the way ad firms are structured.

• Screen wars: As advertisers find it harder to reach consumers in a fragmented media world, some are turning more often to the outdoors. Television screens are increasingly popping up in grocery and department-store aisles, elevators and even gas pumps — all blaring clips of TV programs, accompanied by ads. Walt Disney’s ESPN and CBS Corp. each have programming running on 20-inch liquid-crystal displays at pumps at gas stations around the country. Gas Station TV, which operates about 5,000 such screens in 300 cities, offers ads from marketers such as General Motors’ Chevrolet and Sony. Last year, CBS inked a deal to have its programming also air in the waiting rooms of doctors’ offices.
 
• House guest: Over the years, ad makers have tried various methods to learn about consumers, from focus groups to online polls. But many on Madison Avenue are skeptical of these methods, believing consumers don’t always share their true feelings in those types of traditional settings. So a growing number of ad agencies are expected to try a different approach: having researchers spend long periods of time with consumers to find out more about how they live.
 
Some have already tried this. When devising a new ad for J.C. Penney last year, Saatchi & Saatchi sent staffers to hang out with more than 50 women for several days. They helped the women clean their houses, carpool, cook dinner and shop. Rather than pepper them with questions, the agency employees simply observed the women’s behavior and emotions. Their research became the basis of a new ad campaign; the commercials have won praise from Madison Avenue’s creative community.

“If you want to understand how a lion hunts, you don’t go to the zoo — you go to the jungle,” said Sandy Thompson, global head of strategic planning for Saatchi, which is owned by Publicis Groupe.

• Green backlash: Corporate America latched onto environmental marketing last year, as big companies spent millions of ad dollars promoting their products and services as eco-friendly. Some people in the ad business are predicting a backlash this year from consumers who question whether companies are living up to their promises. “Marketers will be more intensely scrutinized for their green efforts — those that don’t hold up will be called out via blogs and elsewhere online, ultimately leading to consumer skepticism,” said Greg Stern, chief executive of the ad firm Butler, Shine, Stern & Partners.
 
• The antisocial movement: Privacy issues, combined with the fact that consumers have only so much free time, could damp the boom in social networking on the Web. “Nobody has 5,000 real friends,” says Tim Hanlon, senior vice president of Denuo Group, a media and advertising consulting firm owned by Publicis. “At the end of the day it just becomes one big cauldron of noise.” For marketers, he says, that will mean the sites will be much more effective as a consumer-research tool than as a venue to peddle products.

Suzanne Vranica is a writer for WSJ.com

Compliments of WSJ.com

Zenith has also predicted that worldwide online ad spending will leap from $36 billion to $44.6 billion in 2008. The company stated in their report “we predict Internet advertising to pass three milestones over the next three years. We expect it to overtake radio advertising in 2008; to attain a double-digit share of global advertising in 2009; and to overtake magazine advertising in 2010, with 11.5% of total ad spend.” These are definitely some good New Year’s Resolutions for the industry to strive towards.