Given the current economic conditions, and its knowledge of advertiser plans for the upcoming season, ZenithOptimedia is projecting a 2.2% overall increase for advertising in 2011 in the U.S, a slight increase from their July forecast of 2.1%. ZO expects larger increases of 3.5% in 2012 and 2013 and figures it will take several years for ad spend to reach the level it was at in 2008.
Despite recent unenthusiastic reports about the state of our economy ZO noted that network radio seems to be holding its own. The latest Miller Kaplan reports that in the YTD through August, network radio was up 3% vs. a year previous. Q3 was up versus 2010 with financial, insurance and retail as the lead categories. Heading into Q4, network radio vendors are experiencing tight or close to sold out inventory with multiple sales events being promoted during the holidays. Due to fear of an NFL lockout a few months ago and now potential NBA lockout, sports programming in Q4 is very strong, with NFL and MLB post season dollars being up versus a year ago. With the network radio marketplace still looking somewhat healthy, ZO says it is sticking with its last prediction of 2011: for network radio to finish up 2.0%.
ZO continues to see TV dollars moving from network to cable, and this trend will likely continue as cable networks continue to add quality programming to their lineups. The largest estimated increases in spend are in internet (12.6%) and cable TV (12.0%). The media they expect 2011 decreases for are newspapers (-8.5%), business magazines (-4.0%), network TV (-2.0%) and syndication (-4.0%).
Network TV maintains the largest share of national TV dollars in 2010, but again, ZO predicts that cable will garner a larger share of spend in 2011 and beyond. Network spend began Q1 ’11 down YOY due to the absence of the Olympics, fewer men’s basketball ‘March Madness’ games on CBS, and the shift of college football games to cable and ESPN.
Zenith predicts that network TV will end the year down -2.0%, a revision of their July forecast of 0.0% growth, based on year to date actuals. They predict a decrease of -1.0% in 2012, despite the return of the Olympics to NBC. With the Olympics taking place in London, the time difference will mean fewer events airing live than there were for the Vancouver Olympics.
In real terms, the broadcast networks are not making the same ad dollars as they did several years ago. In an effort to generate new streams of revenue, networks are looking to licensing and retransmission fees. In an effort to combat online viewing of popular programs, Fox has changed its licensing agreement for non-paying users of Hulu. New episodes of its shows are now available eight days after the telecast’s air date.
CBS has signed a deal with Amazon to allow streaming of several series, in their entirety. This adds to Amazon’s expanding library of over 8,000 TV programs and movies. Amazon Prime subscribers have unlimited access to this library of content, while others can access through Amazon On Demand on an à la carte basis.
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 12.0% in 2011, 10.0% in 2012 and 10.5% in 2013.
Turner is unveiling their ‘TV Everywhere’ initiative this season. ‘TV Everywhere’ allows current cable subscribers to stream full episodes, on PC, tablet or mobile devices, free of charge. To begin, spots featuring network stars will inform the viewers of this new concept.
New TV ad formats are emerging. Networks like USA and MTV have experimented with ‘podbusters’, often using cast members to break through clutter and counter ad-skipping. Also, while most cable inventory is sold as run of network, Time Warner’s Turners networks have begun bundling spots targeted at specific demos. As for optimizing TV ad networks (e.g. Google TV), that will be a long, slow rollout, with cable operators and cable networks netting the early gains.
The spot TV marketplace during the first half of 2011 was robust and strong in many categories. Unfortunately high gas prices and a decline in consumer confidence have resulted in local markets slowing in the flow of business. There is strong growth, 43%, in the first half of 2011 for medicines and proprietary remedies, while pharmaceutical houses showed a 74% decrease in spend on Spot TV.
The 2012 spot TV marketplace is expected to be extremely volatile with the Presidential election at hand. Primaries will be pivotal for candidates and after the billion dollar political spend in 2010, stations and marketers are gearing up for a turbulent marketplace. To add to the frenzy will be the Olympics in August, bringing new and returning business to the local markets. Even when the economy was soft in 2010, political dollars drove market pricing.
Zenith predicts a -4.0% decrease in advertising expenditure for syndication in 2011. Spending in 2012 is expected to decrease -12.0%, followed by a -10.5% decrease in 2013. Comedies constituted the majority of the top twenty syndicated programs among Women 25-54 during Q2 of the 2010-2011 season, with the weekly airing of Two and a Half Men remaining the top-rated series with this demographic as well as with most measured targets.
Global highlights:
• Global ad expenditure forecast to grow 3.6% in 2011 after a modest slowdown in expenditure growth towards the end of the year
• Growth forecast for 2012 remains a reassuring 5.3%
• This picture is consistent with a history of ad market growth after many previous stock market shocks, assuming the world economy does not deteriorate dramatically
• Developing markets to increase their share of the global ad market from 31.0% in 2010 to 34.9% in 2013
• Internet the fastest-growing medium between 2010 and 2013 (14.6% a year)
• Television to contribute most new ad dollars (46% of total)
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