Indiantelevision.com Team

(4 March 2008 3:00 pm)

MUMBAI: In 2008-09, traditional forms of advertising will suffer as TV audiences fragment and online advertising continues to take a greater share of marketing budgets, says a recent Screen Digest report that examines the outlook for the global TV advertising market to 2012.

As the economy looks set for a downturn, Screen Digest senior analyst and advertising specialist Vincent Létang expects to see sluggish growth to 2009, with the outlook improving from 2010 to 2012.

Létang says, "Advertising spending tends to amplify economic cycles - and in some instances, it actually anticipates downturns. Although we're not expecting advertising budgets to be affected this year, thanks to the quadrennial events, Screen Digest believe we'll experience the real impact in 2009, which will be the toughest year for advertising revenues. Whilst the overall picture for ad revenues is flat or in decline, two areas will enjoy growth - online will continue to grow at a pace, buoyed up by a strong search advertising market and digital TV channels will be taking a larger proportion of ad budgets by 2012, at the expense of the traditional broadcasters."

The research predicts that 2008 will be a difficult trading year for TV advertising, with spend growing at a lower rate than the economy at only 1.9 per cent in Europe and 1.5 per cent in the US. However, TV advertising revenues will enjoy a welcome quadrennial boost from key events that happen only every four years - including the Beijing Olympics, the European football championship and the US elections.

While these events will help avoid a recession for TV ad revenues in 2008 by neutralising the effect of the slowing economy, their effect will be temporary and certainly will not be able to bolster the fragile advertising environment in 2009.

The report forecasts that advertising revenues will grow below average GDP growth between 2008-2012, with annual growth rates of 3.6 per cent in Europe and 3.7 per cent in the US. The growth rate in 2011-12 will be higher as the economy picks up after 2008/2009, at 5 per cent in Europe and 6 per cent in the US. Most of this growth will come from online advertising, which is expected to grow on average by 17 per cent every year until 2012.

By 2012, advertising will be a three-tier market with online at the top, TV in the middle and traditional media bringing up the rear.

Online advertising, when both search and display are combined, will have enjoyed double-digit growth every year to 2012. TV advertising will have retained its 2007 market share, but the traditional broadcast channels will have seen their share of the ad budgets slipping.

The research contrasts the growth rate of the European traditional channels of up to 2 per cent per year, with the digital channels that are expected to experience advertising growth rates of 20 per cent per annum.