ZenithOptimedia Group's April Advertising Expenditure Forecasts for the U.S. was released yesterday as part of its regular quarterly tracking. Overall for 2007, the majority of Zenith's predictions remain unchanged from their previous forecast. However, downward revisions to their 2007 print forecasts, both magazines and newspapers, have resulted in a lower overall estimate compared to their prior report. They now predict growth of 3.4% for 2007, down from their calculation of 4.1% in December due to less ad spending in print media.
For consumer magazines, 2006 finished up with more publications folding or reducing their ratebases as more people and revenue traveled to the Internet. Many of these publications also saw losses as a result from residing in over-saturated categories.
Magazines will continue the trend of adjusting their ratebases downward to streamline costs. One big variable in tightening the circulation model is the double-digit paper and postage increase that the publishing industry faces in 2007. More publications will follow Time magazine's lead by offering audience guarantees rather than buying off the traditional ratebase model. Newsstand sales continue to be on the decline to start the year. For 2007, 2008 and 2009 they are projecting growth of 4.6%, 5.0% and 5.5%, respectively.
As more trade publications emphasized their digital editions, B-to-B ad spending took a significant hit in 2006 as more dollars were shifted to online versions. They have therefore revised their estimates downward from December and foresee minimal levels of ad spend growth of 1.0% in 2007, 2.0% in 2008 and 2.5% in 2009. These increases are due primarily to rising overhead expenses associated with the print versions of these publications.
As circulation continues to drop and advertising revenue shifts to online editions, they estimate that newspaper advertising will experience no growth in 2007, revised down from December. 2008 and 2009 growth estimates remain at 1.5% for each year. Looking further into the future, editors are considering removing classifieds out of their print version by 2020.
ZenithOptimedia's Internet forecast for 2007 remains unchanged from December at 29.0%. They have adjusted 2008 Internet spending upward in their latest forecast as they expect political candidates to embrace online opportunities more than in years past. 2008 will also see more of the standard shift from traditional media to interactive with emerging markets such as Moms, Hispanics and seniors becoming the focal point during the year. As a result, their 2008 forecast has been increased to 19.0%. Their revised 2009 forecast will see a considerable drop to 7.5%, resulting from the decreased shift in budgeted dollars as political marketers will be largely absent during the year.
Billboards are still positioned to gain a larger portion of ad dollars. Advertisers that have not traditionally been big billboard spenders are beginning to warm up to the medium and are starting to see it as an effective way to build awareness at an efficient CPM level. They project ad spend growth of 6.0% annually from 2007 through 2009, unchanged from their previous estimate.
They expect the guerilla media segment to continue to grow as more clients look to stand out form the crowd with new, innovative ideas and media campaigns. Targeting capabilities of everything from branded coffee cups to aerial banners allow advertisers to engage consumers on a more personal level, helping to build important word of mouth exposure. Their non-traditional out-of-home projection remains unchanged from their December forecast, with significant growth of 15.0% annually from 2007 through 2009.
They predict Cinema spending will continue to grow at a rate of 15.0% per year through 2009, unchanged from their previous forecast.
Direct Response spending is forecast to increase at a strong pace from 2007 through 2009, with Direct Mail spending expected to grow at a slightly more modest rate. Their prediction for 2007 Direct Mail spending remains unchanged from their last forecast, with growth of 3.5% in 2007. ZenithOptimedia believes that Other DR media expenditures will increase by 5.2% in 2007. Money will be shifting from the traditional target direct response vehicle of Direct Mail to the Internet, as well as toward more hybrid DRTV buys. For 2008, they continue to predict growth in Direct Mail at 3.5% and Other Direct Response at 5.0%. This trend will continue into 2009 as DRTV is increasingly embraced by traditional advertisers. Web transaction accounting is expected to become more reliable as well through the increase of independent auditing. As a result, 2009 spending in Direct Mail will grow 3.0%, while Other Direct Response will increase by 5.8%.
Currently, multiple dayparts such as evening news, daytime and late night are struggling and have made Network TV stagnant. This, combined with the increasing migration of dollars away from traditional media, has online reaping the rewards. They have reached the tipping point, where Internet spending will continue to grow aggressively and more marketers incorporate online platforms into their campaigns. With streaming video and other new media emerging, marketers are taking advantage of these options at the expense of traditional media. It is clear that we have reached the Digital Age.
