Zenith lowers U.S. ad spend prediction to 2.1% growth


ZenithOptimedia released its global ad forecast today, which predicts global ad spend will grow by 4.1% in 2011, just 0.1 percentage points below the prediction they made in April. It will return to $471 billion, the level it reached in 2008 before the recession. For the US, given the current economic conditions, and knowledge of advertiser plans for the upcoming season, Zenith is projecting a 2.1% overall increase for advertising in 2011, slightly down from their previous estimate of 2.5%.

ZO expects larger increases of 3.5% in 2012 and 3.2% in 2013. Although recovery will continue, the economy has still not returned to the level it was at before the recession, and neither has ad spending. It will take several years for spend to reach the level it was at in 2008 for the U.S.

ZO continues to see TV dollars moving from network to cable, and this trend is likely to continue as cable nets continue to add quality programming to their line-ups. Print will also suffer on account of digital media, but eReaders and tablets have given magazines a new lease on life. The largest predicted increases are in internet (12.6%), cable TV (10.0%) and cinema (6.0%), with the largest decreases in newspapers (-8.5%), business publications (-4.0%) and consumer magazines (-1.0%). Marketing services are expected to grow 1.9% in 2011.

ZO has revised its year-end prediction for 2011 network radio finishing up 2.0%. While some networks reported YOY growth in March and April, there were some networks that performed slightly below what they anticipated. So far the Q2 scatter marketplace is seeing spending flat to slightly up versus a year ago due to Easter being late this year. Q3 2011 is pacing up versus Q3 2010 with a many advertisers releasing last-minute budgets four to six weeks prior to campaign start date. Retail is still the lead category in network radio with multiple sales events being promoted in Q2 and Q3 (holiday and summer sales events). Financial/insurance has also been a popular category in both upfront and scatter. Other categories utilizing the medium are after-market automotive and home improvement.

Zenith predicts that spending in spot radio will also increase 2.0% in 2011. The spot radio marketplace has returned, with advertisers across all categories seeing growth in spend. Advertisers are placing six to eight weeks in advance and last-minute advertisers are seeing large premiums and sell-out market conditions on top stations.

Network TV continued to attract the largest share of TV dollars in 2010, but ZO predicts cable will garner a larger share of spend in 2011 and beyond. Network spend began Q1 2011 down year-on-year due to the absence of the Olympics, fewer men’s basketball ‘March Madness’ games on CBS, and the migration of college football games to ESPN. Since ZO’s April forecast did not anticipate the amount of college sports moving to cable, they revised their figures. Zenith predicts that network TV will end the year flat, a revision of their previous forecast of 3.0% growth.

They predict a decrease of 1.0% in 2012 despite the return of the Olympics to NBC. Since they will be taking place in London, the time difference will mean fewer events will air live compared to the Vancouver Olympics. NBC Sports Chief Mark Lazarus has already promised that more events will be aired live rather than saving the best for time-delayed coverage in primetime, which is what NBC has done in the past. Therefore, more viewers are expected to tune in online to watch their favorite events rather than wait to watch pre-recorded versions. In fact, key to NBC’s win was a promise to adapt its coverage to the digital age. The last Summer Games in Beijing attracted an unprecedented amount of online viewing, and this trend is expected to continue during the 2012 London Games. Also, with Comcast-owned sports networks now under the NBCU umbrella, more Olympics coverage will be airing on cable (especially on Versus).

The recent Comcast/NBC Universal merger is of historical proportions and gives Comcast the marketplace dominance it seeks. The new media giant has already begun to swing its weight on the programming front and is likely to do the same in the advertising space to redefine itself as a powerhouse within the media landscape. Comcast is sticking with tradition, at least when it comes to the rights to broadcasting the Olympic Games. In June, Comcast/NBCU won the rights for the next four Olympic Games: the 2014 Sochi Winter Olympics, the 2016 Rio de Janeiro Summer Olympics and the 2018 and 2020 Games. Comcast is
taking a risk with continuing to have NBC properties air the Olympics, as they haven’t been very successful in recent years despite the enormous audience they draw.

After a lackluster 2010/2011 season for freshman series, networks are committed to developing series with high production value, introducing high-budget pilots like ABC’s Pan Am and Charlie’s Angels, NBC’s Smash, CBS’ Person of Interest and Fox’s Alcatraz and Terra Nova. Body of Proof and Happy Endings were the only two 2010/2011 pilots from ABC to make it to a second season. The only freshman series NBC renewed was Harry’s Law, while Breaking In and Raising Hope made it to a second season on FOX. As usual, CBS came out on top, renewing Blue Bloods, Mike and Molly and Hawaii Five-0.

The broadcast daytime daypart continues to suffer; ABC/Disney announced that General Hospital’s time slot (2pm or 3pm across the country) will be given back to the affiliates in 2012. ABC/Disney says it still supports General Hospital, but it has made it clear that soaps will not play a big role in the network’s future. ABC has already cancelled All My Children (ending in September 2011) and One Life to Live (ending in January 2012) to make way for new – and cheaper – talk shows The Chew and The Revolution.

Cable networks will continue to build momentum – especially those seen as alternatives to broadcast prime (USA, TBS, TNT, FX), largely thanks to the return of big-spending automotive and financial advertisers. Zenith expects ad spending in cable to grow 10.0% in 2011, 9.0% in 2012 and 10.0% in 2013. Helped by the move of much of NCAA men’s basketball tournament to Turner’s TNT and truTV, cable saw significant growth in Q1 2011. The cable upfront has been strong. The big groups attempted to move advertisers from their biggest networks to their emerging ones. Turner pushed truTV, while Discovery pushed Investigation Discovery, Military and Science. The Comcast/NBCU merger moved Comcast’s cable networks (E!, Style, Versus, Golf Channel and G4) under the NBCU umbrella, which already includes top-rated networks like USA, Syfy, Bravo, CNBC and MSNBC. During this year’s upfront, NBCU encouraged advertisers to move into its smaller Comcast-acquired networks.

The 2011 spot TV marketplace has seen increases in all categories for both radio and television. Annual increases of 4.0%, 8.0% and 2.0% are expected for 2011, 2012 and 2013, respectively. The greatest category increase in spend is the automotive. While there were declines in spending for autos as a result of the earthquake in Japan, manufacturers found alternative parts and suppliers, and production is increasing across all autos. The spot TV marketplace during the first half of 2011 was robust and strong in all categories. Unfortunately high gas prices and a decline in consumer confidence have resulted in local markets slowing in the flow of business. While home improvement, landscaping and financial categories have all come back strong, the fast food and retail categories have slowed.

Zenith predicts a 2.0% decrease in advertising expenditures for syndication TV this year. Spend in 2012 is expected to decrease 8.0%, followed by a further 8.0% decrease in 2013. Twentieth Television and Fox Television Stations have signed a deal for weekend syndication rights for the hit show Glee. In fall 2013, Fox stations in top markets, including New York, Chicago, and LA, will air reruns of the comedy. Oxygen has already started showing Glee repeats after it obtained cable syndication rights for $500,000 an episode last year. Still more than two years away from its syndication debut, Modern Family, Twentieth Century Fox’s Emmy-winning sitcom, has cleared 70.0% of the country. Now, there are 70 markets where the show will air when it begins syndication in fall 2013. Since January, Twentieth has added more than ten station groups, including Tribune, Cox, Hearst, Meredith and Raycom.

In Q1 2011, the weekly airing of Two and a Half Men was the top syndicated program among most measured viewing groups. The 25th and final season of The Oprah Winfrey Show will end in September 2011. In Q1, it garnered the largest W25-54 viewership across all syndicated talk shows, but ranked fourth in the overall syndicated landscape behind Two and a Half Men, Judge Judy and Wheel of Fortune, respectively.

Looking to fill in the void after Oprah’s departure, Dr. Oz and The Ellen DeGeneres Show have received upgrades to numerous time periods for the upcoming season. Dr. Oz has moved into Oprah’s coveted 4pm time slot in many markets, but ABC is airing local news in large markets like New York and Philadelphia. A newcomer to syndication, long-time news anchor Katie Couric announced a deal with ABC for her to host a new talk show, set to launch in September 2012.

As for Live! With Regis and Kelly, Regis Philbin announced he would retire from the series this November after more than 28 years as host. Kelly Ripa, who recently celebrated her tenth anniversary on Live!, will have several prospective co-hosts on the show leading up to the grand reveal. In other news, Nancy O’Dell will take over Mary Hart’s coveted seat on Entertainment Tonight next season. Renewals for next season include Maury, The Jerry Springer Show and The Steve Wilkos Show (all renewed until 2014). My Wife and Kids, Judge Jeanne Pirro, Don’t Forget the Lyrics, Are You Smarter than a Fifth Grader? and The Real Housewives franchise will not be returning for the 2011/2012 season.

Zenith predicts total internet ad spend to grow 12.6%, 15.8% and 16.1% in 2011, 2012 and 2013. The brightest spot in terms of online ad growth will be online video. According to eMarketer, online videos will become “the main form of brand advertising in the digital space.” High levels of growth are expected for streaming video ads. Driven in large part by affordable, do-it-yourself tools to create streaming video ads, this category will see much activity from local advertisers. Adspend for online video is expected to grow 22.0% in 2011, 26.0% in 2012 and 25.0% in 2013.

Mobile marketing will continue to grow, fuelled specifically by apps, user-friendly browsers and 3G/4G speeds. As smartphone ownership now comprises 25.0% of all cellphone ownership, mobile ad sales will enjoy growth of more than 20 cents of every online ad dollar spent next year. Zenith anticipates that mobile will be the fastest-growing ad medium, and they predict increases in spend of 45.0%, 47.0% and 49.0% in 2011, 2012 and 2013 respectively.

The big three social platforms – Facebook, Twitter and YouTube – are all developing in a way that is attractive to both small businesses and large companies. Social media is creating a new type of advertiser, including individuals and content creators. Facebook is already commanding more than 25.0% of the impressions served for display ads, and 34.0% of digital impressions in the display category are currently generated by social media sites. If display ad spending growth flattens and social media impressions continue to grow at even the fraction of its previous rate, then it is safe to say that the majority of display growth will be attributed to social media. YouTube said it now has over 20,000 different advertisers running campaigns – a 100% increase from last year.

Social media ads are expected to increase in price based on current patterns, the influx of new advertisers, new creative formats and improved targeting. A promoted trend on Twitter is now $120,000 per day, up from $25,000-30,000 when Twitter launched the service in April 2010. The introduction of Twitter’s automated platform could also drive up prices for ads, which are sold on an auction basis like Google’s AdWords. 2012 should expect an even bigger rise in spending with the Presidential Election. Republican Tim Pawlenty disclosed his 2012 presidential aspirations on Facebook, while Mitt Romney did so with a tweet. President Barack Obama kicked off his re-election bid with a digital video emailed to the 13 million online backers, whereas Facebook is Sarah Palin’s main tool for communicating with her supporters. Since 2008, most politicians have embraced social media and are expected to use it heavily during the campaign process.