MAGNAGLOBAL has released an updated “US Media Advertising Revenue Forecast,” now anticipating media suppliers to generate $170.3 billion dollars of ad revenues during 2010. In recent months fears of a return to recession were widespread, and despite these conditions the media economy remained resilient. Media owners’ ad revenues likely grew by 3.3% on a normalized basis (excluding the impact of Political and Olympic advertising on local and national TV, respectively) during Q2, and should improve sequentially to rise by 3.5% during Q3. In total this will lead to growth of 2.8% during 2010 on a normalized basis (excluding local TV political and network TV Olympic advertising), compared to previous expectations of +2.1% growth. Including the impact of local TV political and network TV Olympic advertising, they now expect ad revenues to grow by 4.1% this year.
On a global basis, the impact of changes to MAGNA’s US model result in a change to their global “core media” forecast as well. They now expect global “core media” advertising (which excludes direct mail and directories) to grow by +5.6% in constant currency terms during 2010, up from prior expectations of +5.0%.
Normalized ad revenues should improve further next year as recovery continues to take hold. However, much of this growth may occur while the US currency depreciates in the near term, and consequent improvements in the US may be something of a pyrrhic victory for global media owners. In this context they expect advertising to grow in 2011 by 3.1% on a normalized basis (total ad revenues will grow at a slower pace because of the absence of significant political or Olympic advertising). They continue to expect 3.6% average growth rates between 2010 and 2015.
Among the various sectors, television (note we will not report all sectors in this story from the forecast) remains the largest ad platform in the US, and continues to grow rapidly. The $58.6 billion dollar segment is led by national cable – whose ad revenues grew by approximately 13.4% during Q2 – as well as by local TV, which rose by 16.7%. These growth rates should generally persist through the remainder of the year.
Online advertising grew by 14.4% during Q2. While this pace only slightly exceeded their expectations in aggregate, the share attributed to national media (primarily reflecting digital display and online video/rich media) was significantly higher than recent trends would have predicted. MAGANA estimates that national online advertising grew by 21.4%, compared to 14.5% for local online and 11.4% for direct online (which includes paid search). For all of 2010, they now expect $25.6 billion in online advertising, up by 12.1% vs. 2009. Online advertising was likely helped by continuing growth in e-commerce, which rose during Q2 by 14.0% vs. the prior year period.