The Internet & Media analysts at Barclays Capital have revisited the 2009 ad spending forecast they issued in October and are now looking for an even worse year ahead. They are now expecting double digit declines for radio companies, TV station groups and TV networks. Overall ad spending in the US is projected to decline 10% to $252.1 billion, a much worse drop than the previous forecast from Barclays of a 5.5% drop.
“The Barclays Capital U.S. Media and Internet team estimates that 2009 total U.S. advertising will decrease 10.0% to $252.1 billion (vs. our prior down 5.5% estimate) and 2010 will increase 1.0% which is derived from our bottom-up methodology across 11 subsectors of media. This compares to our 2008 estimate of down 5.0% which follows 2007 up 0.4%,” the revised outlook stated.
“For 2009, we expect national advertising to outpace local advertising, with national decreasing 8.4% to $152.9 billion but local decreasing 12.2% to $99.2 billion. For 2010, we are estimating national and local advertising up 2.5% and down 1.4%, respectively,” said the report from analysts Craig Huber, Anthony DiClemente and Douglas Anmuth.
For radio, a 13% ad revenue decline is now forecast for 2009, worse than the previous prediction of a 7.4% drop. Barclays is expecting 2010 to be down as well, but only by 1.7%.
Broadcast television networks are now projected to see a decline of 10% in 2009, rather than 8%. 2010 is expected to be up 3%. “We expect the national broadcast advertising marketplace will hold up better than local,” the analysts said.
For TV stations, the forecast calls for local and national spot combined to decline 15.5% in 2009 – far worse than the previous estimate of 8.9%. A further decline of 1.1% is seen in 2010, despite the return of political spending.
“We are lowering our estimates for 2009 and 2010 Cable Networks advertising revenue to down 3.0% and up 5.0%, respectively, given the deteriorating consumer economy. Previously, we estimated revenue growth of 1.8% for 2009,” the Barclays analysts said.
The news is negative for other media as well. Newspaper revenues are seen dropping 17% in 2009 and 7.5% in 2010. Magazines are expected to drop 15% and 5% for the next two years. For outdoor, the forecast drops are 6% and 4.4%.
Even Internet expectations have been lowered. “We are lowering our 2009 estimate for U.S. Internet advertising revenue from $28.3 billion to $25.1 billion (up 6.1%) based on 4% growth in Display, 20% growth in Search, a 2% decline in Auctions and Other, and 5% growth in Lead Generation & E-mail. For 2010 we believe online advertising growth will reaccelerate to 12%, reaching $28.1 billion, based on 12% growth in Display, 15% in Search, 5% in Auctions and Other, and 6% in Lead Generation and E-Mail,” the forecast stated.
