• by David Goetzl , June 22, 2006

PricewaterhouseCoopers says the death of the 30-second spot is greatly exaggerated. In its annual media forecast, released Wednesday, the advisory firm said that advertising will remain the dominant revenue source for broadcast and cable networks--despite DVR proliferation--until at least 2010.

The forecast projects that ad dollars will make up 62 percent of network and cable revenues in 2010 (some $52 billion). And advertising will grow at a compound annual rate of 7.1 percent until then.

Broadcast network advertising, however, is projected to grow at a slightly less robust rate of 5.2 percent.

PwC, which projects that DVRs will be in 31 percent of U.S. homes by 2010, downplayed the devices' effect on the ad market. The report said that "DVR penetration will contribute more to television viewing and to the viewing of commercials than it will detract. Consequently, we expect DVRs to enhance viewership and to support advertising growth."

PwC cited several new DVR-proof ad models as reasons for its bullish viewpoint, including ad insertion while a program is fast-forwarded, ads that remain on-screen during fast-forwarding, and interactive advertising opportunities.

Another potential marketing tactic that can combat DVR ad-skipping is product placement, PwC wrote--which it projects to grow to some $2 billion in revenue in 2010, up from $750 million last year. The 2010 projection would represent 4 percent of broadcast and cable ad dollars.

The forecast also predicts slow growth for local television stations, projecting that the national spot market will grow at a 4.4 percent compound annual rate to $12.8 billion in 2010. And local advertising, due in part to a slowing in retail sales, is projected to grow at a 3.8 percent annual rate to $17.7 billion in 2010.

As a whole, local station ad dollars are projected to grow from $25 billion in 2005 to $30.5 billion in 2010, representing a 4 percent compound growth rate.

The forecast also predicts that VOD will be the fastest-growing business opportunity for cable operators--especially with currently airing programs increasingly offered--increasing at a compound annual rate of 18.3 percent to $3.4 billion in 2010.