The Canadian advertising market shrank an ‘unprecedented’ 9.3% this year, but ZenithOptimedia’s latest advertising expenditure forecast – issued last week – predicts spending to rebound by a modest 2.4% in 2010.

That’s the good news. The bad news is that it represents the smallest year-over-year increase since 2002, when the ad market contracted sharply in the wake of 9/11. And according to Ruth Klostermann, VP, strategic resources at ZenithOptimedia’s Toronto office, much of the 2010 growth will be inflationary.

‘It’s not real growth, it’s barely more than inflation,’ Klostermann told MiC last week. ‘But I think that will start to come maybe late next year and slowly moving forward.’

Any return to pre-recession spending levels, however, will be measured in terms of years, not months. ZenithOptimedia doesn’t expect Canadian ad spending to reach the $10-billion plateau again until 2012, with that year’s projected spend of $10.14 billion, slightly below the record high of $10.18 billion established in 2008.

Media Experts president Penny Stevens predicted that 2010 will be characterized by a ‘relentless hunt for value’ from clients and agencies. ‘For the media sellers, it’s going to be another tough year, I think,’ she said. ‘This year was all about price, but I think next year is all about value.’

ZenithOptimedia president and CEO Sunni Boot is confident client spending will return, but speculates that the way companies go to market may have forever changed in the wake of new strategies employed during the recession.

This year saw some ZenithOptimedia clients release marketing dollars in smaller amounts than they did previously, as they waited to see how the market was performing. That meant that, instead of allocating up to 50% of their advertising dollars at any one time, they released fewer dollars more frequently.

‘They saw that the caution worked, and I think we may see more of that,’ said Boot. ‘The world has forever changed, and we’re delusional if we think it’s going to go back to the good old days.’

Still, the Canadian market is rebounding faster than the US, where ad spending is projected to dip an additional 2.6% in 2010 after a staggering 12.9% decline this year. (Another report issued last week, by Interpublic Group’s Magna division, predicts US spending to increase 0.2% next year).

‘Our [decline] has been a little more moderate, and I think that’s historically true,’ said Klostermann. ‘It’s a little flatter. We don’t go into deep troughs, and the gradients – both up and down – are a little smaller.’

She predicted that lower interest rates will continue to boost consumer spending, but noted that Canadian unemployment will peak at 10% next year, while our relatively strong dollar – up 16% this year against a weakening US dollar – will continue to hamper manufacturing and exports.

‘We want to think positively, but we’re also hedging our bets,’ said Klostermann. ‘I think people are cautiously optimistic. People are fully expecting that we’ve hit the bottom, and we’re slowly climbing out of it.’

PHD Canada president Fred Forster says that much of what happens in 2010 will hinge on consumer confidence. ‘If the consumer is back and spending, then marketers will see an up-tick in sales, and media dollars will follow,’ he said in a recent interview with MiC.

Forster predicted that consumers will remain hesitant in the short term – indeed, the Conference Board of Canada recently noted that the Canadian consumer confidence index fell for the second consecutive month in November – but predicted that marketer spending could rebound in the second half of 2010.

Stevens said that clients’ 2009 spending was flat to down anywhere from 5-8%, and there’s no indication it will rebound in the next year. ‘We’re not going to that back for a while,’ she said. ‘It’s really dependent on the consumer, and the consumer, as you can well imagine, is very cautious. Will it return to pre-recession? No. I’m cautiously optimistic, but I suggest that’s rather naïve.’

The downturn may have also triggered a seismic shift in how ad dollars will be allocated in the future, as traditional media like newspapers and magazines continue to lose ground to digital media. ‘Whether things will be the same as they were before, I don’t know,’ said Klostermann. ‘The dynamic of media is changing; everything is getting more digital.’

Traditional media’s share of the total advertising pie was shrinking even before the recession, and has only accelerated as advertisers continue to plow more dollars into the internet and the rapidly growing mobile space.