Online Ads Propel Mass Media Gains In 2012

In 2012, national mass media will continue to gain share, due to strength in national online display, online video, mobile and national cable network advertising, according to a new forecast from MagnaGlobal.

Due to persistent weakness in the U.S. economy, however, the Interpublic unit has revised its 2012 growth forecast down from 4.8%to2.9%, including P&O. 

A slowdown in real personal consumption expenditures, manufacturing activity, and ongoing problems in the labor and housing markets all contribute to the revised outlook.

MagnaGlobal’s 2011 forecast remains unchanged at 1.6% growth, including the impact of political and Olympics advertising, and media suppliers are still expected to generate $173.5 billion of advertising revenues in 2011. 

Next year, however, MagnaGlobal’s estimates are further impacted by continued disinflation as it encompasses core media categories, including television, Web, print, radio and outdoor, as well as direct marketing categories. 

Excluding direct marketing components, the revenue growth of core media categories is estimated at 2.9% in 2011 and 4.3% in 2012.

Under the current expectations of a slow-but-positive economic recovery in 2012, media suppliers’ advertising revenues will continue to recover from the severe recession of 2008-2009, MagnaGlobal projects. 

In dollar terms, it expects revenues to reach $178.5 billion in 2012, which is still significantly less than the pre-recession level of $206.1 billion in 2007.

Across its three media segments, TV will be the fastest-growing medium after online in 2012, with advertising revenues increasing 7.1% compared with online’s 11.6%.

Direct media, meanwhile, is exhibiting an increasing discrepancy between traditional activities -- directories and direct mail -- and digital, including Internet Yellow Pages, paid search, and lead generation.

Traditional direct media remains significant -- $26.2 billion in 2011 -- but it is increasingly challenged by digital alternatives, MagnaGlobal finds.

Digital direct media, on the other hand, continues to outperform. In particular, paid-search growth has accelerated this year to 21.7%, and is expected to maintain double-digit growth in 2012: 13.%.

Recent algorithm improvements have helped accelerate cost-per-click trends and have led brands to rely more heavily on search engine marketing and search engine optimization while eschewing low-quality sites. For 2011, we now expect $31.1 billion in total online advertising, up 19.5% vs. 2010. 

Direct Mail is a sector worth paying close attention to if the economy continues to deteriorate and postal regulation is reviewed.

In local mass media -- local radio, local TV, local newspapers and outdoor media -- the signs of the slowdown we identified in our last update point to continued declines through the second half of 2011 and into 2012.

MagnaGlobal now expects this segment to decline -1.1% in 2011 and -0.4% in 2012, driven primarily by weakness in newspapers, while Radio will be flat, while outdoor should grow 4.2% in 2011 and 4.5% in 2012.

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