New Online Ad Forecast: 12% Growth For 2012

by Gavin O'Malley, May 1, 2012, 3:37 PM

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Just as gadget-crazed as consumers, advertisers are expected to accelerate their nontraditional media spends through 2012. MagnaGlobal now expects spending on Internet media (including national and local) to grow by 12.2%, this year. That’s up from the Interpublic unit’s previous forecasts of 10.9%, and, if correct, will represent $35.6 billion and a 20.2% market share.

“Encouraged by the rise of smartphone and tablet usage and the availability of scalable platforms, mainstream advertisers are now fully embracing all mobile formats (display, search, video, in-app),” said Vincent Letang, EVP and head of global forecasting at MagnaGlobal.

Letang expects mobile-related online ad revenues to grow by 53% in 2012, to reach $2.4 bil. “iAd and Facebook in particular will create more opportunities for marketers in various mobile environments in 2012,” he said. With $1.6 billion in 2011, mobile advertising already represents 5% of online advertising, and 1% of total domestic advertising.

That said, Internet media is still driven by paid search, as well as online video, which Letang expects to grow by 24% in 2012 to reach $2.2 billion.

In terms of advertising sectors, technology, finance and telecoms are expected to increase their respective expenditure at higher than average rates, according to the company.

Other big categories, however, will likely be affected by internal difficulties (pharmaceuticals), or sluggish consumption (retail), and might show little or no increase in their marketing expenditure in 2012.

Automotive remains a concern, but more for traditional media buyers, MagnaGlobal notes. In 2010, and again in 2011, a double-digit recovery in car sales was matched by a double-digit growth in automotive ad spend. Going into 2012, however, while new car sales were up in the first quarter, protracted unemployment and steep gasoline inflation could hamper further growth.

More broadly, MagnaGlobal reported earlier this year that a weak economic environment and high unemployment would result in cautious consumption growth and marketing expenditures. However, as in every quadrennial year, MagnaGlobal said the ad market should benefit from the cyclical incremental ad expenditure generated by the elections -- presidential, congressional and gubernatorial -- and the Summer Olympics.

Due to a relaxation of campaign finance rules by the Supreme Court in 2010, super PACs contributions are likely to boost ad spending, Letang added.

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