Forecasters Downgrade 2013 Ad Outlook: Remain Bullish On Future, Especially For Digital, TV

Just as planning -- and some buying -- begins in earnest for the 2013-14 upfront advertising season, two top forecasters have issued tepid projections for advertising growth. Publicis’ ZenithOptimedia unit this morning revised its projections for global ad growth this year down two-tenths of a point to 3.9% and shaved one-tenth of a point off its U.S. forecast to 3.4%. Pivotal Research Group analyst Brian Wieser, meanwhile, offered an even more dour outlook for U.S. advertising growth, estimating it will rise only 1.2% this year.
In the case of ZenithOptimedia’s revisions, Head Of Forecasting Jonathan Barnard noted that the lower 2013 estimates are due, in part, to better-than-expected results last year.
“2012 turned out better than we expected, leaving tougher comparatives for 2013,” he explains, adding: “In dollar terms, our forecast for 2013 is marginally ahead of last forecast, by $430 million.”
ZenithOptimedia’s revisions are based on its last quarterly forecast released in December 2012, and Barnard noted that since then, “the consensus among economic forecasters is that the global economy will gradually build up speed over the next three years,” which is why he says ZenithOptimedia is holding steady on its global ad expansion forecasts for 2014 and 2015, which are projected to rise 5.0% and 5.6%, respectively.
Barnard projects U.S. ad spending will expand 4% and 5%, respectively, in 2014 and 2015, noting: “Ad expenditure in North America is much more robust than in Europe. Consumer confidence, retail sales, job numbers and house construction are all trending encouragingly upwards.”
The Internet remains the fastest-growing medium by a wide margin, with ZenithOptimedia projecting global Internet ad spending to expand 14% annually through 2015.
“Display is the fastest-growing subcategory, with 20% annual growth, thanks partly to the rapid rise of online video and social media advertising, each of which are growing at about 30% a year,” Barnard writes, noting that better audience measurement data is fueling confidence among marketers and agencies to spend online and in mobile.
“Some broadcasters are starting to trade packages that include both online video and television spots,” he says, adding: “Advertisers are now recognizing the value of social media for brand building and purchase consideration purposes.” 
The expansion of paid-search budgets, meanwhile, appears to be slowing down, with ZenithOptimedia calling for a 13% rate of annual growth through 2015.
The good news for upfront sellers is that both ZenithOptimedia’s and Wieser’s revised outlooks have upside momentum for 2014, which will account for three-quarters of 2013-14 upfront advertising deals.
And while Wieser also projects that digital will continue to outpace analog media this year, he also sees national TV expanding slightly faster than the overall advertising marketplace (+3% over 2012).
“Cable will probably gain share of national TV budgets at a slightly faster pace in 2013 than occurred last year,” he writes, adding: “On this basis, we forecast cable advertising growing by 5%, with broadcast networks down by 2% for all of 2013.”
Wieser predicts the growth is coming mainly from “the creation of new brands who seek to differentiate themselves through awareness of differentiation vs. competitors against the broadest-possible audiences,” and cites potential emerging categories such as healthcare insurance, as well as the dynamic nature of the consumer electronics industry, which continues to spawn new products and services that “benefit from the use of TV.”
“At the same time, as we note above, these same advertisers can and will allocate significant shares of their budgets to digital advertising, as this has become the dominant ‘engagement’ medium for most advertisers, effectively replacing the role that print-based advertising served for so many years.”
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