Fancy that, a brighter outlook for ad spending
Magna Global: Spending will be up 6.0 percent this year
April 28, 2014
Here’s something we haven’t heard in a while: Confidence in the media economy.
A new forecast from Magna Global, an Interpublic agency, predicts that ad revenue will increase by 6 percent this year, up from its December prediction of 5.5 percent growth.
Magna credits the improving economy for the bump in its forecast.
“Still healing from the 2008-2009 recession, the economy was already forecast to gradually improve in 2014-2015 but the latest forecasts from the Philadelphia Fed (February) are even better than the previous ones (November),” Vincent Letang, executive vice president and director of forecasting at Magna, tells Media Life.
Letang notes that the unemployment rate continues to drop while important indicators like industrial production are growing. Those things increase advertisers’ confidence in the economy, making them more likely to invest in advertising because they think consumers will be spending.
“For instance, the rate of unemployment is forecast to go down to 6.5 percent in 2014 versus 7.0 percent in their previous forecast. Industrial production is now expected to grow by 3.7 percent this year, compared to a 3.0 percent prediction in November,” Letang says.
Certainly political and Winter Olympics advertising are responsible for a good deal of the year-to-year gains, about a third of the $10 billion growth Magna expects in 2014.
And the quadrennial World Cup will give ad spending a boost, most notably for the tournament’s U.S. carriers, Univision and ABC/ESPN. Plus there’s been a kickup in spending by government and health-related organizations with the adoption of the Affordable Care Act.
But Letang says that even excluding those special events, the media economy will be growing at a healthy pace.
“Without that incremental political and Olympics spend the 2014 growth would be 3.9 percent instead of 6.0 percent,” he says.
TV will see an 8.3 percent bump in ad dollars this year, led by the Olympics, political and World Cup. That’s quite a change from last year, when spending was down slightly at minus 0.6 percent.
Digital media spending will rise by 14.4 percent this year, compared to growth of 17 percent last year.
The share of all advertising for digital media will grow to 27 percent, bigger than national TV but still behind total TV, including local and cable, which sits at a 40 percent market share.
Still, Magna predicts in its forecast that digital will outpace TV by 2018.
Out of home will be the only other major category to see year-to-year growth, up 3.7 percent.
Print ad spending will remain down for another year, falling 7 percent, while radio will be flat.
Magna also predicts a healthy 2015, with ad spending up 4.6 percent.
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