Behind the brighter
outlook for advertising
Leading media analysts are upping their forecasts
By Diego Vasquez
Oct 22, 2010
Last year at this time it seemed every ad spending forecast that came out was drearier than the last. But this year that has changed. Two forecasts released this week from ZenithOptimedia and Magna Global were even more upbeat than three months ago. ZenithOptimedia upped its U.S. outlook for 2010 to 2.2 percent growth, double the rate it predicted in July, with its outlook for 2011 at 2.4 percent, coming after two straight years of declines. Magna Global was even more optimistic, putting 2010 spending including political and Winter Olympics at 4.1 percent, compared to 3.4 percent forecast in July, while predicting growth of 1.9 percent next year. The cheerier outlooks are driven partly by the huge gains in automotive, financial services and retail spending this year, as well as the big political money. But mostly it's simply a sign that the overall economy is improving, despite fears of a double-dip recession just a few months ago. Jonathan Barnard, head of publications at ZenithOptimedia, talks to Media Life about why 2010 is looking brighter, how that affects the 2011 forecast, and how BP has pushed spending to record levels in Florida.
Why has 2010 been unexpectedly strong on a global level?
Advertisers have committed a lot more money than expected to sporting events around the world (the Super Bowl, Vancouver Olympics, soccer World Cup in South Africa), and strong corporate profits have allowed many to invest more in their core brands.
What prompted you to revise your North America forecast by so much?
Political advertising and PR advertising by BP have been extremely strong on U.S. local television, and a lot of big advertisers in the finance, retail and automotive categories that practically stopped spending in 2009 and early 2010 are now back in the market.
What is primarily driving the recovery in the U.S.? Is that different from other countries?
Like elsewhere, the recovery in the U.S. is being driven by the strengthening of the general economy. Consumer spending is holding up relatively well, and corporate profitability is high.
The U.S. is recovering more slowly than most other markets however, because unemployment is stubbornly high. The U.S. will lag behind until unemployment falls substantially, making consumers -- and therefore advertisers -- more confident about their future prospects.
Do your estimates include political and/or Olympics for the U.S.?
They do--mid-term elections and Winter Olympics are providing a nice boost to spend this year, but the extra spend stimulated by the presidential election and summer Olympics in 2012 will be even larger.
What will 2010's stronger-than-expected growth mean for 2011 estimates, for both the U.S. and the world?
2011 is looking stronger than it did three months ago, but the rapid growth this year means that growth rates will remain roughly stable in the U.S. and fall back slightly worldwide.
What effect has spending by BP had on local TV advertising in the U.S.?
BP has spent heavily in areas most affected by the oil spill, and local stations in Florida are selling ads at record levels.
Which advertising categories are you most optimistic for in the U.S. and why? Which are you least optimistic about? Do you think the revival in auto spending will carry into next year?
Sorry, I'm not in a position to forecast by category - so much depends on new product launches by the big manufacturers, and promotional campaigns that only insiders will know about in advance.
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