Forecast: Ad spending growth still modest

Were it not for the fact that this is an Olympic and election year, the U.S. media economy would be in dour shape.

Ad revenue will be up 4.6 percent this year, according to a forecast issued today by Magna Global, but that includes a record amount of political spending as well as bigger-than-expected dollars from the Summer Olympic Games.

Excluding political and Olympics, ad spending would be up just 2.6 percent.

Compared to both 2004 and 2010, other political and election years, 2012 will be unimpressive.

“This is a modest achievement in an election year,” notes the report.

“Eight years ago, in 2004, Olympics and political [P&O] drove the market to +7.1 percent. Four years ago, in 2008, P&O was not enough to rescue growth during the worst of the recession (-5.2 percent). Two years ago, mid-term elections contributed to ad revenue recovery (+6.2 percent).”

Third quarter spending excluding P&O was up just 0.7 percent, though that was better than second quarter, which was flat.

P&O will account for $3.4 billion in spending this year.

Advertisers simply aren’t confident in the economy right now, and that’s holding back spending in some major categories.

Media is also in flux, with an increasing number of dollars flowing to lower-priced new media such as online and mobile, which is leading to less spending on traditional media such as newspapers and magazines.

Indeed, both print categories will be off significantly this year. Newspapers will fall 8.6 percent and magazines 7.5 percent. During the first half of the year, both media declined 10 percent.

By contrast, digital spending will increase 12.8 percent this year, the biggest growth for any category.

Even television, which will get the bulk of political and ad spending, will be up less than digital, a still-robust 9 percent.

Radio spending will be about flat to last year, down 0.2 percent, with strong automotive spending balancing out losses in other categories.

And out of home will be up 4.2 percent, continuing a surge that began last year for the category.
 

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