New York – MAGNAGLOBAL, a division of IPG Mediabrands, recently released its updated US Media Owners Advertising Revenue Forecast.
The 2011 forecast remains unchanged at 1.6% growth, including the impact of political and Olympics (P&O) advertising, and we still expect media suppliers to generate $173.5 billion of advertising revenues in 2011. Due to persistent weakness in the US economy, however, we have revised our 2012 growth forecast down from 4.8% to 2.9%, including P&O. A slowdown in real personal consumption expenditures, manufacturing activity, and ongoing problems in the labor and housing markets all contribute to our revised outlook. Our estimates are further impacted by continued disinflation. Our forecasts encompass core media categories including Television, Internet, Print, Radio and Outdoor, as well as direct marketing categories (Direct Mail, Directories). 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 2007 ($206.1 billion).
National Mass Media will continue to gain share due to strength in national Online Display, Online Video, Mobile and National Cable Network advertising. Across our 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.” We believe the 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. 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. If Saturday delivery is ultimately eliminated – as has been proposed in the U.S. and is the norm in many European markets – 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 we identified in our last update point to continued declines through the second half of 2011 and into 2012. We now expect this segment to decline -1.1% in 2011 and -0.4% in 2012, driven primarily by weakness in Newspapers (-5.5%), while Radio will be flat (-0.4%), and Outdoor should grow 4.2% in 2011 and 4.5% in 2012.