Gurus see leveling off in 2010, slow ad recovery


“Television is resilient,” said Magna Global forecaster Brian Wieser as the forecast panel kicked off day two of the UBS 37th Annual Global Media and Communications Conference in New York. He and the other forecasters agree that digital media will see the biggest gains over the next few years, but some traditional media are rebounding.

Steven King of ZenithOptimedia, owned by Publicis, is looking for a slow recovery, with annual growth rates in advertising spending returning to “normal” in about three years.

On a global basis, the medium facing the greatest decline in years ahead is not what you’d probably guess – newspapers. Rather, the gurus mentioned magazines as facing the toughest future in terms of generating ad revenues for the world as a whole.

Looking at North America, Wieser, King and Adam Smith from WPP Group’s GroupM are all looking for 2010 to be an improvement over dismal 2009. Smith forecasts a 4% decline in ad spending after a 7.8% decline this year. King thinks 2010 will be down 2.4% after a 12.7% drop this year. And Wieser, whose company is part of Interpublic, thinks 2010 will  be up by 1% after a 16% drop in 2009.

When audience members asked about the disparity in outlooks, the three forecasters insisted that they’re not really very far apart – and that what really matters is the consolidated annual growth rate (CAGR) over the next five years or so, where they are in general agreement. Wieser, specifically, is predicting a 5% CAGR over the next five years.

Because it focuses primarily on the US marketplace, RBR-TVBR has generally devoted considerable attention to the Magna forecast, coming for many years from Bob Coen and now from Wieser. He’s looking for total US ad spending to be up 0.2% in 2010, with wide variations by media.

At the top of the heap in his forecast is Internet Search, with revenues expected to rise by 11.7% in 2010, with a CAGR of 10.3% for 2010-2015. While he sees Other Internet/Digital advertising growing by only 4.2% in 2010, growth is expected to pick up for a five year CAGR of 7.1%. Combining the two Internet components, he’s projecting 7.8% growth in 2010 and a CAGR of 8.7% over the next five years.

Television (unlike his predecessor, Wieser doesn’t break out local, national and cable) is projected to be up 5.6% next year, with a CAGR of 2.5% for the next five years balancing out the election and non-election years. Radio (local, network, satellite) is seen as dropping 4.4% in 2010. In fact, Wieser even thinks there will be a fifth straight decline in 2011, of 0.2%, followed by very modest growth for a five-year CAGR of 0.0% – zero, flat, no growth.

Wieser sees Outdoor advertising having another down year, off 0.5% in 2010, then rebounding for a CAGR of 4.4% for 2010-2015.

As you would expect, US newspapers fare the worst in his forecast. They’re expected to see ad revenues decline 9.2% in 2010. That is, however, an improvement from the projected 25.7% drop this year. Over the next five years, Wieser is forecasting newspaper ad revenues to drop every year, producing a negative CAGR of 4.3%.

Magazines are also seen as declining every year for the next half-decade. The forecaster puts the 2010 drop at 2.2% (after falling 18.8% this year), with a five year CAGR of 2.3%.

Ad revenue declines are projected to get worse each year after 2010 for Yellow Pages and other Directory businesses. So, while the 2010 decline is pegged at 5% after a 12.1% drop in 2009, the negative number goes to 15.5% in 2015 for a CAGR over the next five years of minus 8.9%.

Direct Mail is hanging in there. Wieser sees a rebound of 2.1% in 2010 from an 1.3% decline this year. The five-year CAGR is put at 2.3%.

So, his broad view is that US advertising will be up a tiny 0.2% in 2010 after falling 15.3% in 2009. Growth over the 2010-2015 period is expected to be at a CAGR of 1.6%.

The massive “Magna 2010 Global Advertising Forecast” is available for free download from the company’s website.

RBR-TVBR observation: In the past we had several times suggested that Bob Coen was too optimistic about radio revenues when we were hearing other indications from within the industry. Now we’re thinking that Brian Wieser is erring in the opposite direction. Pretty much everyone in the business that we’ve heard from is budgeting for growth – not much growth, but growth for radio revenues in 2010. That goes for the (vastly diminished ranks of) Wall Street analysts who cover the industry as well. To predict not only one, but two more years of decline in radio revenues is certainly not supported by anything we’re hearing.