Ad spending in 2014: Still a slow go
Strong growth in digital, cable and spot TV will be offset
December 10, 2013
If the U.S. media economy was measured on the growth of digital, cable and spot television alone in 2014, it would be a boffo year indeed.
But declines in print will once again offset big gains in those three categories and lead to limited growth in total ad spending in 2014, according to a trio of forecasts released today by London agency Zenith Optimedia, GroupM and U.S. agency Magna Global.
All three caution the general economy remains in recovery mode and that some advertisers are still holding back on spending.
Zenith predicts that U.S. ad spending will rise 3.5 percent next year, up slightly from a prediction of 3.4 percent in its previous forecast in September.
“While we are well past the worst of the economic downturn, economic growth remains slow,” notes the Zenith report.
Magna foresees stronger growth, up 5.5 percent, owing largely to Olympic and midterm election spending. But that’s down from a prediction of 5.9 percent growth in September.
“The U.S. economy is still on a slow but real recovery path that will continue in 2014,” Magna says in its report.
GroupM puts 2014 U.S. ad spending growth at 2.9 percent, the same as its most recent forecast in August.
All three project that spot television will see another huge windfall from political advertising, with the 2010 Supreme Court ruling that opened spending to special interest groups and businesses generating record numbers for the third straight election cycle.
The implementation of the Affordable Care Act on Jan. 1 will also lead to a short-term burst of spot TV ad spending by federal and state governments.
Cable television will continue to pull ad dollars from broadcast, with the addition of more high-quality programming and the move of major sporting events from broadcast to cable.
Next year will mark the first time the Final Four will air on cable, and that will bring millions in ad revenue to Turner Networks.
But the biggest growth in ad spending will once again be seen in digital.
Magna predicts a 12.5 percent increase next year, 4 percentage points higher than the next-fastest-growing medium, television.
Zenith predicts that digital will rise by 18 percent in 2014, the same rate as 2013.
“These steep growth trajectories are driven by marketers who are increasingly comfortable with investing in new media channels where consumers continue to spend more and more time,” notes the report.
In other words, advertisers don’t want to waste their time on media where people are spending less time, and digital’s rise has come at the expense of print.
Indeed, GroupM points out that the digital’s growing share is largely at the expense of print media.
Newspaper advertising will dive down another 8 percent in 2014, Zenith predicts, while magazines will slide 2 percent.
Their recovery will largely depend on how well they adapt to the idea of digital first. It’s certainly not a sure thing.
“As publishers expand their mobile platform availability and metrics become more accessible for emerging platforms, we expect that dollars will shift towards mobile — within certain product categories – putting continued pressure on pure magazine revenue year-over-year,” says the Zenith forecast.
Radio and out-of-home advertising, meanwhile, remain somewhere in between the rosy fortunes of digital and the dour predictions for print.
Radio will be up 1.9 percent next year while out of home will grow a solid 5 percent. Magna is less optimistic about radio, predicting a 0.4 percent decline, though it also sees out of home increasing by 4.8 percent.
Zenith is particularly bullish about the future of digital billboards.
“The opportunity exists for increasingly granular targeting as the conversion of static billboard locations to digital continues,” notes the report.
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