The first half of 2009 is likely to be the worst period of this recession, but the inaugural forecast by Magna Director of Global Forecasting Brian Wieser sees only 1% compound annual growth over the next five years, following a 14% decline this year. His forecast is for total TV advertising to be down 14.4% this year and for local radio to drop 21.8%.
For 2009 Magna forecasts that media suppliers (see our previous story for Wieser’s new methodology) will collectively generate 14% less advertising revenue on a normalized basis (excluding the impact of political advertising and incremental Olympic advertising), as advertising media supplier revenues will fall from $189 billion to $161 billion. The first half of 2009 will likely turn out to be the worst period of this recession, the forecast said, during which time Magna estimates media supplier advertising revenues will have fallen by 18% vs. the same period in 2008. Magna expects further decline through the second half of 2010, although at moderating levels, and expects total market growth to show up in the second half of 2011.
Say what you will about TV being “old media,” Wieser says it still “dwarfs all other media” and will for the foreseeable future. And he cited data to prove it’s a myth that youth are leaving television for other media devices. He’s also dismissive of the idea that DVRs are killing the effectiveness of television advertising. Even if you assume that all DVR use results in spot skipping and no ad impression – which he doesn’t think is true – the growth in population and TV consumption will still offset the DVR impact for years to come – his model goes through 2014.
For all of television, Wieser is forecasting that while ad revenues will be down 14.4% in 2009 to $47.7 billion, the compound annual growth rate (CAGR) will be 3.2% from 2009 to 2014 (normalized to exclude Olympics and political). National TV business (his model defines national by the source, not the recipient, so this includes network/syndicated) is expected to decline 6.3% this year, but grow 2.2% CAGR through 2014. Local is expected to drop 18.6% in 2009, with a CAGR of 1.3% through 2014.
“Radio has really been a victim of what I call self-inflicted wounds in many cases,” Wieser said, noting the lack of consensus on measurement methodology and the battle with satellite radio. He also noted the rise of iPods and other audio devices. “So when we think about those issues it’s not surprising that advertisers have increasingly shifted out of what is a secondary media, a tertiary media, for many advertisers,” Wieser said.
So, while radio remains a “dominant media” relative to all other media, ranking only below TV in consumption, “total revenue growth will be relatively weak,” the forecaster said. He lumps together Network and Satellite Radio, which he expects to be down 11% this year, with a CAGR of 1% through 2014. Local radio is forecast to take a hit of 21.8% in 2009, and then have a negative CAGR of 1% through 2014.
Wieser puts total radio at $14 billion this year, down 21% for the year, with a negative CAGR of 0.8% through 2014.
RBR/TVBR observation: Wieser’s forecast approach will take some getting used to. It’s not laid out in the same sort of charts used by his predecessor, Bob Coen, nor are the categorizations the same. Most important, though, is whether Wieser’s new model proves to look further ahead with greater accuracy. Only time will tell.