Barclays Capital gives credit in upping the overall numbers primarily to cable TV, network TV, and local broadcast advertising, all of which offset weakness from traditional media. So it is raising its 2011 estimated U.S. advertising estimate to 3.5% YOY from 2.0% and its 2012 estimate to 5.5% YOY from 4.7%. They now estimate US ad spend will reach $188B and 1.15% of nominal GDP by 2012. Barclay’s 2011 estimate is above Wall Street consensus and its 2012 estimate is highest on the Street.
The company estimates both local and national radio will be up 1.5% in both 2011 and 2012, off of estimated 6.7% growth in 2010 (yes the 2009 comps spiked it). For total television, the estimates are 8.8% growth in 2010; 9.5% in 2011 and 5.5% in 2012. Broken down, Network TV will see 7.2% growth in 2010; 9.4% in 2011 and 4.0% in 2012. Cable will see 8.5% growth in 2010; 9.5% in 2011 and 7.5% in 2012. Local TV broadcast will see 12.5% growth in 2010; 10.1% in 2011 and 4.0% in 2012. Online will see some strong gains as well: 11.8% in 2010; 12.6% in 2011 and 11.4% in 2012. Outdoor is looking at 5% across the board for all three years.
Newspapers and directories will see the biggest hits, with 2.8% and 5.0% 2010-120 CAGR drops, respectively. Certainly, because US consumers prefer to access news and information online.
What’s driving the recovery? Automotive advertisers, of course: “Automotive advertising continues to represent the largest and fastest growing category within media. In the first half of 2010 estimate, automotive advertisers represented 17% of the market and 47% of the growth.”
The Seasonally Adjusted Annual Rate for US light vehicles has been steadily increasing over the past several months and reached 12.3M in October and November, its highest point since September 2008 (excluding “cash for clunkers”).
Barclays estimates cable TV will continue to reach new highs, growing in the high single digits annually. For network TV and local broadcast stations, a strong upfront, an improving economic backdrop, and increasing consumer spending has helped drive robust pricing in the scatter market, which continues to pace up by at least double digits above upfront levels.
While mentioned above that radio is estimated to hold its own, in the positive territory through 2012, Barclays still grouped it in the decline zone: “Traditional media continues its decline: We continue to remain skeptical of traditional media, which broadly consists of outdoor, radio, magazines, newspapers, and directories…traditional media will lose nearly 400 bps [basis points] of overall share.”
For radio, Barclays says the medium sits lower on the media value chain, driven by its secular challenges (iPod listenership, free/low-cost internet radio options, etc.), which in turn lead to further listenership declines. “In addition, local ad buyers are shifting their budgets towards other less secularly challenged local advertising mediums (such as cinema or outdoor) or to national budgets. We believe radio will continue to lose share of the advertising market, as its share declines from 11.2% in 2000 and 10.3% in 2005 to an estimated 9.0% in 2010 and 8.5% in 2012.”
