Interpublic: Emerging Media Begin To Decelerate, Online Video Becomes Fastest Growing

Asserting that the "hyper acceleration" of some of the fastest growing emerging media platforms - including search, social media, online video, gaming, interactive TV, and digital out-of-home - appear to be slowing, Interpublic's Magna unit Tuesday released an outlook that nonetheless called for a 31.1% rate of growth for emerging media in 2009. While a relative slowdown for the new forms of ad-supported media, it is markedly better than the tepid 4.0% rate of growth another Interpublic unit, Universal McCann, predicts for the overall ad-supported media marketplace during 2009.

The twin forecasts, which were delivered by Magna's Brian Wieser and Bob Coen (see related story on Magna's reorganization in today's edition), respectively, were part of Interpublic's so-called "mid-year update" for the advertising industry's economic outlook.

In taking his first stab at an outlook for next year, Coen said, "I don't think 2009 is going to be a great year," but added, "It can't get much worse." By much worse, Coen was referring to his revised outlook for U.S. ad spending growth in 2008 and his final estimate for 2007. Coen revised his outlook for 2008, a so-called quadrennial Olympics and presidential election year that historically would signal double-digit growth, down to 2.0% from an earlier estimate of 3.7% in December 2007. Coen also took his final estimate for 2007 down to -0.7%, from his December 2007 estimates of +3.7%.

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Coen attributed the downgrades to reduced economic expectations that have curtailed advertising spending in most of the major media.

Among the major media, Coen projected Internet display advertising would grow the fastest this year, rising 12.0% over 2007, about three times the rate of all national ad-supported media combined.

The Internet's growth, however, will not be coming from its endemic marketers - so-called "dot-com" advertisers - which will actually reduce their total advertising spending this year by 7.1% from 2007, marking the second consecutive year the category has scaled back.

While growing off a much smaller base, Magna's Wieser said emerging media nonetheless appear to be slowing down, especially online search, which he projects will grow only 24.0% next year. While still healthy by traditional media ad growth standards, Wieser said it represents a slowdown from 26.5% growth in 2007 and 29.5% in 2006.

The fastest growing of the emerging media platforms tracked by Magna, he said, is online video, which he projects will grow 45.0% to $805 million in 2009. However, online video's rate of advertising growth has ebbed from 54.2% in 2008 and 67.4% in 2007.

The next fastest growing emerging medium is mobile advertising, which is expected to rise 42.6% to $298 million in 2009, followed by social media (+37.4% to $1.474 billion), gaming (+27.4% to $295.9 million), search, emerging out-of-home (+22.7% to $1.954 billion), and advanced TV (+13.7% to $183 million).

Wieser singled out the tepid growth of advanced TV advertising as being especially slow, despite the formation of Canoe Ventures, the new cable industry initiative headed by departing Carat chief David Verklin. Although Wieser said he expects Canoe to have a positive impact on the perceptions and awareness that national advertisers have about enhanced TV - including addressable and interactive TV advertising - he predicted Canoe would not have a material impact on the marketplace until early in the next decade.

As lackluster as the outlook remains for Canoe's efforts, it is not nearly as dismal as the projection for traditional forms of media, especially newspapers, radio and magazines. Coen projects newspaper ad spending will decline 7% in 2007, while radio will fall 0.9%. While magazines are projected to grow 1.0% for the year, Coen noted that magazine ad spending is down 1.5% through the first four months of 2008.

In fact, the first quarter of 2008 hasn't proved to be the kind of boon for any medium that the start of a quadrennial year typically is. During the first quarter of 2004, the last quadrennial year, network TV ad spending was up 11.5%. During the first quarter of 2008, network TV ad spending is up only 1.6%. Similar patterns were evident for spot TV and cable TV, but Coen predicted television would still receive a substantial boost from the Olympics and political ad spending during the third quarter of this year, though it likely would not be nearly as robust as the impact of past quadrennial years.

Copies of both Wieser's and Coen's complete reports can be found here.

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