ZenithOptimedia released its global and US ad forecasts 4/11. This year’s global growth revised down from 4.6% to 4.2% after the turmoil in Middle East and the earthquake in Japan. Their first estimate is that these one-off events have knocked about $2.4 billion off this year’s global ad spend. The underlying recovery remains healthy, though, and they have upgraded their forecast for 2012 from 5.2% to 5.8%. Developing markets are to increase their share of global ad spend from 30.9% in 2010 to 35.1% in 2013. The Internet is to become the world’s second-largest ad medium in 2013, overtaking newspapers.
For the US, which we will focus on, given the current economic conditions, and ZO’s knowledge of advertiser plans for the upcoming season, they are projecting a 2.5% overall increase for advertising in 2011. As we move further past the recession, they expect larger increases of 3.4% 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 advertising spending to reach the level it was at in 2008. Fortunately, most of the large financial, retail and automotive spenders have returned to the marketplace, and with them have come 2011 increases in all media except print and syndication.”
The largest 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 2.6% in 2011.
Radio
Continuing the pace from the Q4 ‘10 marketplace, the January Miller Kaplans showed a 6.0% increase in Q1. Upfronts were also up 3.0% vs. a year ago, with most advertisers returning. Looking at the Q2 scatter marketplace, they’re expecting spending to be flat to slightly up versus a year ago due to Easter being late this year. ZO is still predicting that 2011 network radio will finish up 3.0%.
In the last couple of years, retail was the lead category in network radio due to vendors’ improved copy splitting capabilities when promoting multiple sales events. Financial/insurance has been the hottest category as of late with six advertisers participating in the upfront. Other categories utilizing the medium are aftermarket automotive and home improvement.
The spot radio marketplace has also 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. Zenith predicts that spending in spot radio will be up 2.0% in 2011.
Network TV
Network TV spending is expected to increase 3.0% in 2011—an increase from December’s forecast of 2.0% growth. Increases in 2012 and 2013 are expected to be 2.0% and 1.0%, respectively. Television execs are expecting a strong market for ad sales for the upcoming 2011-2012 season, with especially strong demand coming from the auto, telecoms and banking industries.
Prices are expected to show double-digit increases in the May upfront. Last year, advertisers were still recovering from the recession, but the major networks still saw increases of 6.0-9.0% during the upfront. Considering that this year’s scatter market is around 25.0% to 40.0% higher than the upfront pricing, significant increases in this year’s upfront are to be expected.
As a whole, TV audiences are not shifting so much as adapting. Multitasking with other media continues to increase. According to Nielsen, on average viewers spend three hours and 49 minutes a month simultaneously watching TV and internet. DVR ownership also continues to rise and now stands at 41.0% of all U.S. households.
As commercial-skipping is popular with DVR owners, advertisers are looking for creative ways to keep viewers during commercials. Integrations and branded ads may show value, especially in the light of what has been a rocky 2010-2011 season for freshman series.
After a year-long review process, it was announced on 1/18 that the FCC and DOJ approved Comcast’s acquisition of NBC Universal. Even with the restrictions laid out by the U.S. government, the merger is of historical proportions and still gives Comcast the marketplace dominance it seeks. The new media giant has already begun to swing its weight on the programming front and will likely do the same in the ad space.
The leading men on two of broadcast’s top rated comedies will not be returning for the 2011-2012 season. Charlie Sheen has already been ousted from CBS’ Two and a Half Men, and with hundreds of millions at stake in advertising fees and syndication deals, it seems more likely he will be replaced than that the show will be cancelled altogether.
Meanwhile, Steve Carell will be leaving NBC’s The Office. CBS will fare better than NBC, as it has a slew of highly-rated procedurals and solid comedies.
Super Bowl XLV drew a record-breaking 111.1 million viewers on Fox, surpassing Super Bowl XLIV’s record set last year, and making it the most watched programme in television history.
Cable TV
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, 8.0% in 2012 and 7.0% in 2013. Most cable networks are expected to show double-digit growth in the upfront over last year, with a revitalized auto market pumping hundreds of millions of added marketing dollars into TV. Cable has already begun its upfront for the 2011-2012 season; MTV, Nickelodeon, Current TV and TV One had upfront presentations in early March.
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 NBCU/Comcast merger moves Comcast’s cable nets (E!, Style, Versus, Golf Channel and G4) under the NBCU umbrella, which already includes top-rated nets like USA, Syfy, Bravo, CNBC and MSNBC. Headed up by John Miller, Comcast will combine NBC Sports offerings with Golf Channel, Versus and multiple regional sports networks—a new entity capable of taking on ESPN.
OWN: Oprah Winfrey Network launched in January 2011 and has had mixed success. While the network had solid sampling during its premiere weekend, OWN has failed to maintain the energy of its early buzz and build momentum.
Spot TV
The 2011 marketplace has seen increases in all categories for both radio and television. Annual increases of 4.0%, 6.0% and 2.0% are expected for 2011, 2012 and 2013. The category with the greatest increase in spend is automotive. Not only are factory dollars returning but also Tier III and individual dealer dollars are back in the marketplace.
The spot TV marketplace has recovered from the hit in 2009 and even exceeded expectations for 2010 with heavy political spending on a local level. The 2011 marketplace will not return to the softness of 2009, predominantly due to the return of two critical categories – retail and automotive. Both of these categories have come back very strong and are creating competitive and sellout market conditions. Second quarter is also seeing a return in the home improvement and garden categories, with these sectors placing business months in advance.
Syndication TV
Zenith predicts a 2.0% decrease in advertising expenditures for syndication in 2011. Spending 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 Los Angeles, 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 10 station groups, including Tribune, Cox, Hearst, Meredith and Raycom.
Internet
Zenith predicts total internet ad spending to grow 12.6%, 15.6% and 16.2% 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.” Zenith predicts that online video will grow 22.0% in 2011. Driven in large part by affordable, DIY tools to create streaming video ads, this category will see much activity from local advertisers. The streaming video format is expected to continue its dramatic growth. More DIY and less expensive tools put this ad format within the budgets of even small advertisers. Because of this, two out of every five streaming video ad dollars will come from local advertisers next year.
Mobile marketing will continue to grow, fuelled specifically by ubiquitous 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.
Facebook is on track to receive half of all social media ad spending in 2010. Meanwhile, Twitter’s newly launched ad service is accounted for in the predictions, but only accounts for a small percentage of ad spend for 2010. That could quickly change in 2011 if Twitter’s bid for resonance catches on. Contrary to other industry forecasts, this uptick in the forecast will remain conservative as a result of Facebook click-through rates often being lower than 0.05%, which contributes to a lower CPM.
In 2010, ZO found healthy growth in paid search. Search on mobile devices has steadily grown, and they believe continued adoption of mobile devices will be at the expense of traditional desktops and laptops, both in sales and usage.
Streaming/online audio has received positive press, with Pandora witnessing tremendous audience growth. Ando Media recently reported that Pandora’s audience grew from 215 million in November to 236 million in December. It attributed this to the company heavily focusing on in-car and mobile partnerships. Other pure players (AOL Radio and Slacker) and streaming broadcasters (CBS and Clear Channel) are also seeing increases in Active Listening Sessions. However, soaring smartphone adoption is also giving pure plays a leg up on the streaming competition. As a result, streaming audio is starting to increase its share of digital spend.
