The Barclays Capital U.S. Media and Internet team estimates that 2009 and 2010 total U.S. ad spend will decrease a 13.0% and decrease 1.5%, respectively. This forecast is an update to their December research report that estimated 2009 ad revenue down 10.0% and 2010 up 1.0%. This compares with Barclays Capital economic team’s nominal GDP forecasts of down 1.1% and up 4.0% for 2009-10, respectively, including estimated real GDP down 2.9% in 2009 but up 2.3% in 2010. This compares to the 1991 and 2001 recessions where total U.S. advertising decreased 1.9% and dropped 6.2%, respectively, vs. real GDP decline of 0.2% in 1991 and 0.8% growth in 2001.
The Barclays Capital U.S. Media and Internet team estimates that 2009 total U.S. advertising will decrease 13.0% to $242.9 billion (vs. their prior down 10.0% estimate) and 2010 will decrease 1.5% (vs. their prior up 1.0% estimate) which is derived from their bottom-up methodology across 11 subsectors of media. This compares to their 2008 estimate of down 5.3% which follows 2007 up 0.4%.
For 2009, Barclay’s expects national advertising to outpace local advertising, with national decreasing 11.7% to $148.6 billion but local decreasing 15.0% to $94.3 billion. For 2010, they are estimating national and local advertising down 0.1% and down 3.7%, respectively.
U.S. advertising as a percentage of GDP continues to decline and is forecasted at 1.71% for 2009 and 1.62% for 2010 vs. 1.95% in 2008 and 2.27% on average for 1990-2007 (peak year was 2000 at 2.54%).
Barclays is lowering its 2009 estimate for U.S. Internet ad revenue from $25.1 billion to $23.7 billion (up 2.3%) based on a decline of 1.2% in Display, 8.0% growth in Search, a 7.5% decline in Auctions and Other, and 1.0% growth in Lead Generation & E-mail. For 2010 they believe online advertising growth will reaccelerate to 5.7%, reaching $25.1 billion, based on 2.7% growth in Display, 10.0% in Search, a 1.0% decline in Auctions and Other, and 3.4% growth in Lead Generation and E-Mail. Despite these revisions, they believe the secular shift to online is in-tact and they expect growth to accelerate through 2011 as the Internet continues to capture a greater share of the advertising market. They are not making changes to company specific estimates for Google or Yahoo! as they already reflect overall industry expectations. By their estimates, Barclays thinks Internet ad market share will cross over and pass that of the newspapers in 2010 at 10.5% market share for Internet vs. 10.3% for newspapers.
They are also lowering their Broadcast Television Network advertising revenue estimates for 2009 and 2010 to down 17.5% and up 1.0%, respectively. Their previous estimate was for down 10.0% in 2009. They expect the national broadcast advertising marketplace will hold up better than local.
Barclay’s lowered their broadcast TV local and national spot estimates for 2009 and 2010 and now estimate a decline of 21.5% in 2009 and a decline of 3.2% in 2010. Previously, they anticipated a decline of 15.5% in 2009.
Cable Networks: they are lowering estimates for 2009 and 2010 Cable Networks advertising revenue to down 5.0% and up 2.0%, respectively, given the deteriorating consumer economy. Previously, they estimated revenue decline of 3.0% for 2009.
Radio: Barclay’s estimates radio ad revenue to decrease 15.1% overall in 2009, below their prior estimate of a 13.0% decline, and expect down 4.0% in 2010.
Yellow Pages: They have maintained expectations for 2009 at down 13.0%, and expect down 9.0% in 2010.
Newspapers: They’re maintaining their 2009 and 2010 newspaper advertising revenue forecast of down 21.0% and down 10.0%, respectively, vs. estimates in their recent February Newspaper Fact Book. Their 2009 estimate was down 17.0% and down 7.5% as of their U.S. ad forecast report in December. Specifically, in 2009, they estimate retail down 13.9%, national down 20.0%, and classified down 34.9% (help wanted down 52.5%, auto down 45.0%, and real estate down 35.7%). In 2010, they estimate retail down 7.5%, national down 8.5%, and classified down 17.5% (help wanted down 17.5%, auto down 17.5%, and real estate down 17.5%).
Outdoor: they are lowering estimates for 2009 and 2010 Outdoor advertising to decline 14.0% and remain flat, respectively. Previously, they predicted a decrease of 6.0% in 2009.
Direct Mail: Given mounting cyclical pressures, they are expecting direct mail to decline 10.0% in 2009 (vs. their prior down 8.5% estimate) and remain flat in 2010.
Magazines: Advertising revenue should decrease 20.0% in 2009 (vs. their prior down 15.0% estimate) and decline a further 10.0% in 2010.