Forecast: 2012 spending will be up 5.9 percent

Ad spending barely grew during second quarter, when revenue rose a scant 0.9 percent.

But with political dollars expected to peak in fourth quarter, the outlook for the remainder of the year is decidedly cheerier.

The latest forecast from Veronis Suhler Stevenson predicts that ad spending will be up 5.9 percent this year, to $200.76 billion, one of the most optimistic predictions yet for this year.

That’s nearly double the growth rate of 2011, when ad spending was up 3.2 percent, to $189.53.

Second-half spending will be fueled by two main things, the Olympics and political spending.

Most of that money is going to television, specifically spot TV, which is expected to account for more than half of all political spending in what’s on track to be a record year.

Political advertising will be up by 32.2 percent this year compared to the 2010 election, with more than $3 billion being spent on television.

But there are other areas that are driving the gains as well as the economic recovery chugs along slowly. VSS is high on out of home, which it predicts will grow 6.8 percent this year.

It forecasts a 7.3 percent compound annual growth rate from 2011 to 2016, driven by double-digit percentage increases in digital out of home as well as stronger investment in alternative media, which advertisers are increasingly embracing to stand out from the clutter.

Last year digital out of home grew by 11.2 percent.

Traditional out of home will also see growth “as Americans continue to consume more media outside their homes, particularly in locations that previously did not include ad messages.”

In 2011 traditional OOH increased by 4.1 percent.

Online ad spending will grow at an even faster rate, up 17 percent this year to $27.34 billion.

That does not include spending on new media that’s filtered through traditional media, such as advertising on a magazine’s tablet edition.

But VSS expects that such ventures will begin to generate more dollars in the coming years.

“For traditional media’s branded mobile extensions, growth in the forecast period will be driven by paywalls, sponsored Twitter-type campaigns and the introduction of paid mobile apps,” the report predicts.

“Media companies will defend their advertising revenue bases from content aggregators by offering advertisers packages incorporating traditional, internet and mobile advertising.”
 

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