According to the updated US Media Owners Advertising Revenue Forecast from MagnaGlobal, due to persistent weakness in the US economy, the 2012 growth forecast is revised down from 4.8%to2.9%, including P&O, though the 2011 forecast remains unchanged at 1.6% growth, including the impact of political and Olympics advertising. Media suppliers are still
expected to generate $173.5 billion of advertising revenues in 2011.
A slowdown in real personal consumption expenditures, manufacturing activity, and ongoing problems in the labor and
housing markets all contribute to the revised outlook, and the estimates are further impacted by continued disinflation. 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 expects revenues to reach $178.5 billion in 2012, which is still significantly less than the pre-recession level of the 2007
$206.1 billion.
The Core Media categories are summarized and forecast in the study revision as follows:
- National Mass Media will continue to gain share due to
strength in national Online Display, Online Video, Mobile and National Cable Network advertising. Across 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%.
- Television will benefit from the “quadrennial bonanza.” 2012 Elections and the Summer
Olympics will generate incremental revenue of $3.1 billion for television: $2.5 billion in political advertising (the highest spending ever, mostly on local broadcast television) and $633 million
around the London Olympics (up 5.5% compared with Beijing 2008, and primarily fuelling National Broadcast TV revenues).
- Direct Media is exhibiting an increasing discrepancy
between traditional activities (Directories and Direct Mail) and digital (Internet Yellow Pages, Paid Search, Lead Generation). Traditional direct media remains significant ($26.2 billion in 2011),
but it is increasingly challenged by digital alternatives. Digital direct media, on the other hand, continues to outperform.
- Paid Search growth has accelerated this year to
21.7%, and is expected to maintain double-digit growth in 2012 (13.0%). 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. Expectations in 2011 are for $31.1 billion in total online advertising, up 19.5% vs. 2010.
- If the economy
continues to deteriorate and postal regulation is reviewed, Direct Mail is a sector worth paying close attention to, says the report. If Saturday delivery is ultimately eliminated,
newspapers and advertisers may need to plan ahead, and some advertisers may choose to accelerate shifting dollars into digital.
- In Local Mass Media (local Radio, local TV,
local Newspapers and Outdoor media), the signs of the slowdown point to continued declines through the second half of 2011 and into 2012. This segment is anticipated to decline -1.1% in 2011 and -0.4%
in 2012, driven primarily by weakness in Newspapers, while Radio will be flat, and Outdoor should grow 4.2% in 2011 and 4.5% in 2012.
For additional information, please visit MagnaGlobal here.