Forecast: Trad Media Continues Ad Losses, But TV Does Well In '12

Arrow-overMoneyExpecting an improvement in digital media advertising in 2012 has pushed Interpublic’s MagnaGlobal advertising forecast to show a slight increase to the overall spending this year.

MagnaGlobal says now core media -- excluding political and Olympic spending as well as direct marketing -- will grow 2.2% in 2012 to $149 billion, up from a previous 2.0% projection. Magna reiterated that the U.S. economy is in a “fragile” state.

“The increase is entirely due to an upward revision in our digital media forecast, following a strong 4Q11 and a strong 1Q12,” according to the report.

U.S. advertising revenue -- excluding political and Olympics, but including direct marketing -- was $171.7 billion in 2011, a 3.1% gain from 2010. Magna says this is an upward revision from a 2.9% estimate. When including political and Olympic spending, the U.S. advertising economy was up a scant 1.7% to $172.3 billion, up from a 1.6% estimate made in January.



Looking at specific advertising categories' estimates for 2012, MagnaGlobal says national television will benefit from incremental ad spending from political activity and by the Olympic Games revenue for the third quarter of 2012, increasing by 2.3%.

Magna estimates that ome $2.5 billion in political advertising will be spent in 2012 mainly on local television stations. Overall local station ad revenue will grow by 10.4%. But just looking at core media for TV stations --without political and Olympic advertising -- local TV stations will just rise 0.8%.

National and local Internet media will rise 12.2%, up from a revised from the earlier 10.9% estimate, reaching $35.6 billion and getting to a 20.2% market share. Mobile advertising will soar 53.1% to $2.4 billion, and online video will be 24.0% higher to $2.2 billion. Mobile advertising already represents 5% of online advertising and 1% of total advertising in the U.S. -- $1.6 billion total in 2011.

Outdoor media revenues are estimated to grow by 4.0% this year. Newspaper advertising will continue to decline--by an estimated 6.0%. There will be a 7.2% pullback for national newspapers. Magazine advertising will give up 3.8%. Radio ad revenues will decline by 0.8%. Direct marketing will continue to decline this year -- directories revenues sinking 23.2% and direct mail by 2.4%.

Although automotive advertising has shown double-digit gains in the past two years --- up from very low levels in the midst of the big recessionary 2009 year -- MagnaGlobal says “protracted unemployment and steep gasoline inflation are likely to hamper further growth.”

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