Outlook for 2013 ad spending: Not rosy
Tough comparisons have kept ad spending forecasts low
November 1, 2012
The election is less than a week away, and candidates and special interest groups are pouring money into last-minute advertising.
That will be followed by a spike in ad spending by holiday retailers, who have been shut out of local television for weeks due to the election. They also will be spending heavily on radio, outdoor and online as the holidays approach.
But what of 2013, after political and holiday spending have died down?
It may be a real slog.
Several forecasters have predicted very slow growth in ad spending for the coming year, less than 2 percent.
Even the most optimistic forecasters, such as ZenithOptimedia, which sees 3.6 percent growth next year, have downgraded their predictions from earlier this year.
Magna Global is forecasting a 0.8 percent rise in media advertising revenue next year, down a hair from an earlier prediction of 0.9 percent growth.
The agency is bearish on nearly all traditional media, including television, which had a strong 2012, thanks to record political spending and the Summer Olympics.
“Because political and Olympic revenues in 2012 were particularly strong, and the non-political demand remains static, the odd-year ‘hangover’ will be stronger than usual for television: we expect revenues to be down 1.4 percent to $63 billion,” says its report.
Another forecaster, Barclays, is equally cautious. It’s predicting a 1.9 percent ad spending gain next year, down from an earlier forecast of 2.3 percent.
“Not surprisingly, print media continues to see the most reductions, but we have also taken down our TV estimates, as the Olympics had a greater than expected effect on ratings,” notes Barclays.
At least part of that dour outlook is based on tough comparisons to 2012.
But another factor is the worry that the country could be plunged back into a recession next year if the so-called fiscal cliff isn’t resolved.
“Unless the government acts sometime between the November elections and the end of the year, large tax increases and federal spending cuts are quite likely to lead to recession in early 2013,” Jonathan Barnard, head of forecasting at ZenithOptimedia, tells Media Life.
He says that’s the single biggest issue that could impact the media economy in the coming year.
The fiscal cliff refers to what will happen when the terms of the Budget Control Act of 2011 expire, including a rollback of the temporary payroll tax cuts, a reduction of certain business tax cuts, changes in the alternative minimum tax, the expiration of a number of Bush-era tax cuts, and new taxes related to President Barack Obama’s healthcare plan.
It could result in big tax burdens on individuals and businesses that have yet to recover from the recession.
Because of all that uncertainty, advertisers have become understandably wary. Though many are investing during fourth quarter, with a number of forecasters predicting strong retail spending, they have been slow to set their budgets for next year.
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