The outlook for the U.S. advertising economy appears to have improved in the past month, leading one of Madison Avenue's leading forecasters to upgrade his official estimate for 2010. "We are
modestly upgrading our 2010 full-year forecast and now expect normalized advertising revenues (excluding local TV political and national TV Olympic revenues) to effectively be flat this year, only
-0.1% below 2009 levels," Brian Wieser, director of global forecasting for Interpublic's Magna unit, writes in an update released early this morning, his first quarterly report of 2010.
The upgrade compares with a forecast of a 1.3% decline in U.S. advertising that Wieser originally projected when he released his first 2010 outlook last month at UBS' Media Week
conference in New York.
The forecasts are based on Wieser's new methodology for estimating the U.S. and global ad economies based on the revenues derived by media suppliers, as opposed to
Madison Avenue's traditional method of calculating based on estimates for what advertisers and agencies spend on media.
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Based on his revised outlook, Wieser now believes that U.S. media
supplier will generate $161 billion in "normalized" advertising revenue this year, excluding the effects of the Olympics and the elections.
Wieser also now calculates revenues for
the various media within three sub-categories - direct, national and local - making it difficult to compare how they track vs. other industry estimates, but generally, it appears that online and
digital media continue to fare the best of the major media.
"Direct" online ad spending, which includes things like search, is expected to expand 12.2% in 2010, while
"national" online ad spending will grow 4.0% and local will rise 3.7%, according to Wieser's new estimates.
Among national media outlets, Wieser predicts that "national
TV" will rise 6.2% in 2010, a year that will generate incremental advertising revenues from NBC's coverage of the Winter Olympic Games, and from political campaigns.
Wieser estimates
the Olympics will add $487.5 million to the U.S. ad economy this year, and 2010 election year spending will add another $2.743 billion. Altogether, Wieser estimates the added stimuli will contribute
to a 1.4% expansion in the U.S. advertising economy, which is good news coming off 2009, a year in which he estimates it fell 15.5%.
"In 2010 the advertising economy will also benefit
from the presence of political and Olympic advertising. We include these figures separately to avoid skewing our analysis of year-to-year underlying trends," Wieser wrote. "We estimate that
political advertising will account for approximately $2.7 billion in advertising revenues for local television suppliers (both broadcasters and local cable) during 2010. This contrasts with the $2.4
billion in revenues the sector generated in 2008 and 2006, and represents a 15% increase over those years. We also measure the impact of Olympic advertising on an incremental basis (supplier revenues
which we estimate would not have otherwise occurred were it not for the Olympics - an important distinction as many advertisers alter their creative to represent Olympic themes but would not otherwise
change their budgeting) and estimate $488 million in incremental revenues this year. This compares to the $650 million incremental total we estimate was generated during the 2006 Winter
Olympics."
Wieser also said his longer-term forecasts have been upgraded modestly, reflecting "higher confidence in the economic recovery," and that Magna now forecasts that
normalized advertising will rise by a compounded annual growth rate of 2.3% between 2010 and 2015.
Our longer-term forecasts have also been modestly increased to reflect higher confidence in
economic recovery. MAGNA now forecasts total normalized media supplier advertising revenues will rise by a compounded annual growth rate of 2.3% between 2010 and 2015. That compares with just 2.1% in
Wieser's December 2009 forecast.
| | | | | | | |
| | FORECAST SUMMARY: MEDIA SUPPLIER ADVERTISING REVENUES ($ in Millions) |
| | Brian Wieser | | | | | |
| | Global
Director of Forecasting, MAGNA | | | | | |
| | Tel: 646-376-1560 | | | | | |
| | email: brian.wieser@magnaglobal.com | 2009E | 2010E | 2011E | | 2010-2015 CAGR |
| | | | | | | |
| | Direct
Online(a) | $13,913.3 | $15,617.2 | $17,339.4 | | 10.8% |
| | • Annual
Growth / Decline | 2.9% | 12.2% | 11.0% | | |
| | Directories(b) | 10,601.1 | 9,906.8 | 9,314.0 | | -5.7% |
| | • Annual
Growth / Decline | -13.0% | -6.5% | -6.0% | | |
| | Direct Mail | 19,102.6 | 19,883.4 | 20,345.1 | | 2.1% |
| | • Annual Growth / Decline | -11.6% | 4.1% | 2.3% | | |
| | DIRECT | $43,617.0 | $45,407.4 | $46,998.5 | | 4.1% |
| | • Annual Growth / Decline | -7.8% | 4.1% | 3.5% | | |
| | | | | | | |
| | National
Newspapers(b) | $873.9 | $775.7 | $740.2 | | -6.2% |
| | • Annual
Growth / Decline | -26.0% | -11.2% | -4.6% | | |
| | Network and Satellite Radio | 1,097.9 | 1,119.5 | 1,153.4 | | 2.8% |
| | • Annual Growth / Decline | -10.0% | 2.0% | 3.0% | | |
| | National Digital/Online(c) | 5,551.7 | 5,772.5 | 6,242.7 | | 7.8% |
| | • Annual Growth / Decline | -10.3% | 4.0% | 8.1% | | |
| | Magazines(b) | 15,437.7 | 14,311.5 | 13,859.4 | | -2.7% |
| | • Annual Growth / Decline | -19.6% | -7.3% | -3.2% | | |
| | National Television(b)(d) | 33,267.9 | 35,336.9 | 37,057.3 | | 4.1% |
| | • Annual Growth / Decline | -3.6% | 6.2% | 4.9% | | |
| | NATIONAL | $56,229.1 | $57,316.1 | $59,053.0 | | 2.8% |
| | • Annual
Growth / Decline | -9.7% | 1.9% | 3.0% | | |
| | | | | | | |
| | Local Digital/Online(c) | $3,367.1 | $3,493.0 | $3,746.6 | | 7.6% |
| | • Annual Growth / Decline | -12.1% | 3.7% | 7.3% | | |
| | Outdoor | 5,953.6 | 5,954.7 | 6,183.5 | | 4.9% |
| | • Annual
Growth / Decline | -14.8% | 0.0% | 3.8% | | |
| | Local
Radio(b) | 13,086.0 | 12,758.3 | 12,629.4 | | 0.4% |
| | • Annual
Growth / Decline | -20.9% | -2.5% | -1.0% | | |
| | Local
TV(b)(e) | 14,484.3 | 14,344.4 | 14,488.5 | | 2.3% |
| | • Annual
Growth / Decline | -20.2% | -1.0% | 1.0% | | |
| | Local
Newspapers(b) | 24,442.1 | 21,818.3 | 20,731.3 | | -4.0% |
| | • Annual
Growth / Decline | -27.2% | -10.7% | -5.0% | | |
| | LOCAL | $61,333.1 | $58,368.7 | $57,779.3 | | 0.4% |
| | • Annual Growth / Decline | -22.4% | -4.8% | -1.0% | | |
| | | | | | | |
| | TOTAL
EXCLUDING POLITICAL AND OLYMPICS | $161,179.2 | $161,092.3 | $163,830.8 | | 2.3% |
| | •
Annual Growth / Decline | -14.6% | -0.1% | 1.7% | | |
| | | | | | | |
| | Political(f) | $840.5 | $2,743.1
| $1,139.8 | | ------ |
| | Olympics(g) | 0.0 | 487.5 | 0.0 | | ------ |
| | | | | | | |
| | TOTAL
SUPPLIER AD REVENUES | $162,019.7 | $164,322.9 | $164,970.7 | | 2.3% |
| | • Annual
Growth / Decline | -15.5% | 1.4% | 0.4% | | |
| | | | | | | |
| | (a) Includes Paid Search, Lead Generation and Internet Yellow Pages | | | | |
| | (b) Excludes Internet-Based Advertising Revenues | | | | | |
| | (c) Includes Rich/Online
Video, Internet Classifieds, Email, Digital Display and Mobile | | | |
| | (d) Includes English and Spanish-Language Network TV, National Cable and National
Syndication. Excludes Incremental Olympic Revenues |
| | (e) Includes Local Broadcast and Local Cable TV. Excludes Local Political Advertising Revenues | | | |
| | (f)
Total Political Advertising Revenue on Local Broadcast and Local Cable TV | | | | |
| | (g) Incremental Advertising
Revenue from Olympics on Network TV | | | | |