MagnaGlobal says the impact of political and Olympic advertising, which significantly boosted media revenues in 2010, originally had them forecasting growth of 1.8% during 2011. Its updated forecast says revenues should now grow by 3.1% in 2011. The advertising economy grew 3.2% in 2010 with Q4 growth of 4.5% being the best growth quarter of the year, due to personal consumption expenditures and industrial production.
It’s a bit of a yin-yang: Though growth in nonfarm payrolls turned positive in Q4 2010 and gained traction in Q1 2011, MagnaGlobal sees weakness going forward in several key economic indicators. Last week, the International Monetary Fund reduced its estimate for U.S. GDP growth in 2011 to 2.8%, noting that risks to the outlook remain to the downside. As a result, MagnaGlobal says momentum from the rebound will moderate in the second half of this year and have left their forecasts mostly unchanged.
National cable networks was one of the main beneficiaries of the ad recovery in 2010, growing 12.4% and outpacing nearly every local category, including local online media. Increasingly, large advertisers with reach and frequency goals are turning to Network Cable as an alternative national mass medium to broadcast TV, attracted by lower rates and broader options. “We see a similar trend in 2011, in which large, national advertisers continue to shift dollars to awareness-driven Mass Media including Network Cable, which should grow 10.8% and outpace Network Broadcast TV, which we see growing 2.4%,” said the report.
National Digital advertising has benefited from a healthier national advertiser base as well as wider adoption. They forecast the segment will grow 18.7% this year, driven by Display and Online Video and Mobile. However, Magna sees Direct Media (Internet Yellow Pages, Paid Search, Lead Generation, Directories, and Direct Mail) growing only 0.8% in 2011 and underperforming Mass Media for a second consecutive year.