Following a series of downgrades for the U.S. and worldwide ad economy by some leading industry forecasters, Interpublic's Magna Global unit says it is staying pat for 2013, and upgrading its outlook for 2014.

 

"Although consumers and businesses will remain cautious in the short term, fiscal austerity has not broken the recovery, and therefore we maintain a prediction of +1.0% for top-line normalized ad revenue growth this year, as suggested by our long-term statistical model," writes Magna Director of Global Forecasting in the revised forecast, adding, "That top-line growth rate translates into +2.4% ex-P&O for core media advertising (TV, radio, internet, out-of-home, magazines and newspapers) while traditional direct media (directories and direct mail) continues to under-perform. Factoring in that 2013, unlike 2012, won’t see incremental ad revenues from the Olympic Games or elections, the actual change of ad revenues will be more modest, at +0.4%."

 

Looking forward to 2014, and particularly potential demand in the looming 2013-14 upfront TV advertising marketplace, he predicts, "The reliance of advertisers and media sellers on the upfront market, however, has not dissipated, because the predictability and scale that upfronts provide for both the supply and demand side, remains valuable for most market players. Buying on the scatter market has almost always proved more expensive on a CPM basis during the last ten years.

 

"Not only do the upfront negotiations survive in modern television, but they seem to be winning new converts in digital media too. The creation of the “new fronts” marks a whole new generation of digital media owners battling for upfront dollars and supporting a trading model similar to that of television, for some of their inventory (mostly video). The question is how successful these “new front” competitors will be in stealing share from traditional TV or in growing the upfront pie."

 

As a result, and due to the fact that 2014 also is an Olympics and non-presidential election year, Magna upgraded its 2014 forecast to +5.9% (+3.8% ex-P&O) (previously +5.4%, with +3.1% ex-P&O).