Ad spends in the US to slow down in 2012: Study

MUMBAI: Magnaglobal a division of IPG Mediabrands has released its updated US Media Owners Advertising Revenue Forecast.

The 2011 forecast remains unchanged at 1.6 per cent growth, including the impact of political and Olympics (P&O) advertising, and it still expects media suppliers to generate $173.5 billion of ad revenues in 2011. Due to persistent weakness in the US economy, however, it has revised the 2012 growth forecast down from 4.8 to 2.9 per cent, including P&O.

A slowdown in real personal consumption expenditures, manufacturing activity, and ongoing problems in the labour and housing markets all contribute to the revised outlook.
The estimates are further impacted by continued disinflation. The 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 per cent in 2011 and 4.3 per cent 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 the three media segments, TV will be the fastest growing medium after Online in 2012, with advertising revenues increasing by 7.1 per cent compared with online’s 11.6 per cent.

Television will benefit from the “quadrennial bonanza.” The agency believes that 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 per cent 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 per cent, and is expected to maintain double-digit growth in 2012 (13 per cent). 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, it now expects $31.1 billion in total online advertising, up 19.5 per cent versus 2010.

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