Revised ad forecasts issued by several major research firms and media companies last month indicate that while the market appears to have bottomed out this year, ad spending growth over the next five years will be painstakingly slow.
Media agency MAGNA, a division of Interpublic Group of Cos.' Mediabrands, revised its U.S. forecast to a 1.3% decline for next year, up from an earlier projection of a 2.1% drop, citing some positive economic indicators. For this year, MAGNA estimates a 14.6% decline in normalized U.S. ad revenue, excluding Olym-pic and political advertising.
“There has been a general uptick in economic indicators for next year, particularly in industrial growth,” said Brian Wieser, global director of forecasting at MAGNA. “Expectations for the probability of a turnaround have emerged, which have led to a more favorable environment for advertising.”
However, Wieser added, “More favorable doesn't mean strong positive growth.”
Between 2009 and 2014, MAGNA projects that normalized U.S. media-supported ad revenue will grow at a compound annual rate of only 1.2%.
“Media advertising, although it does move in line with overall economic growth, is generally shifting out of media and into marketing services, such as CRM, event management and PR,” Wieser said.
MAGNA, which tracks media-supported advertising, projects that the strongest areas of growth next year will be paid search (up 11.7%), Internet Yellow Pages (up 11.4%) and rich media/online video (up 10.0%).
Among traditional mass media, national cable TV is one bright spot, projected to grow at 5.0% next year, according to MAGNA.
“National cable TV programming advertising will remain very strong as consumption continues to increase, and TV continues to remain dominant as a primary medium,” Wieser said.
National TV overall will grow by 1.3% next year and will make up 59.6% of total national mass media ad spending, MAGNA projected.
National newspaper ads will be down 3.9%, and national magazine ads will decline 6.2%, according to the forecast.
Also last month, Publicis Groupe's ZenithOptimedia revised its global ad forecast, predicting that global ad spending will increase 0.5% next year and U.S. ad spending will decrease 4.4%. This year global ad spending will decline 9.9% and U.S. ad spending will fall 12.9%, ZenithOptimedia projected. Those figures were revised from July, when the company projected that global ad spending would be down 8.5% this year and U.S. ad spending would decline 10.6%.
“More details have emerged about how painful the first half of 2009 was for the media industry,” the report states. “The world's largest media owners suffered an average 13.1% drop in their media revenues in the first six months of the year, and this probably understates the decline suffered by the industry as a whole.”
The only medium that will grow this year is Internet advertising, with global revenue projected to increase 9.2% over last year, according to ZenithOptimedia. Within Internet advertising, the strongest growth will come from mobile ads (up 69.0%), social media (up 45.0%), paid search (up 20.0%) and online video (up 19.0%).
By 2011, Internet advertising will make up 14.9% of all global advertising, ZenithOptimedia projects.
Internet researcher eMarketer also issued a revised ad forecast last month, projecting that U.S. online ad spending would be down 2.9% this year. In April, eMarketer projected that U.S. online ad spending would grow 4.5% this year.
Next year, U.S. online ad spending will grow 5.9%, compared with an earlier projection of 9.4% growth, eMarketer said. “The reason for the shift is continuing economic problems that are impacting the market,” said David Hallerman, senior analyst at eMarketer.
“Search still makes up about half of online [spending], and that whole area is down, driven by consumer demand.”
While search ad spending is projected to grow 4.0% this year, that is down considerably from 19.8% last year, according to eMarketer.
“Classifieds are also down tremendously,” Hallerman added, pointing to the downturn in recruitment and real estate ads due to the economy. Online classified ads will be down 29.0% this year, eMarketer projected.
However, there are some strong areas of growth in online advertising, according to the report. Online video ads will grow 40.4% next year, followed by lead gen (7.4%), search (6.3%) and rich media e-mail ads (both 5.9%), eMarketer projected.
“The bottom has been reached in terms of ad spending, and the market is slowly climbing up from the bottom,” Hallerman said.
By 2014, total Internet ad spending will reach $34.5 billion, up 9.5% from 2013 spending of $31.5 billion, eMarketer projects. M