ZenithOptimedia’s latest forecast predicts global ad expenditure will grow 4.8% in 2012, reaching $489 billion by the end of the year. Given the current economic conditions, and ZO’s knowledge of advertiser plans for the upcoming season, they’re projecting a 3.6% overall increase for advertising in 2012.
Growth in the American economy continues to be slow and unemployment is steadily falling. Consumers are cautious in their spending, with gasoline and grocery prices remaining high. Despite this, the economy is in a much better place than it was two years ago, and advertising is also expected to increase 3.8% in 2013, and 4.8% in 2014. Traditional media are struggling to reach new consumers and, as a result, are losing revenue. Print in particular is suffering, with more consumers obtaining their news online. Traditional media are converging into easily-accessible, on-demand forms. New devices, such as tablets and eReaders, will likely gain traction with newspapers and magazines as more consumers adopt these devices. Zenith predicts that the internet and other emerging media will continue to grow at the expense of traditional media.
Excepts from the report:
Fortunately, most of the large financial, retail and automotive spenders have returned to the marketplace. We continue 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. Print will also suffer on account of digital media, but eReaders and tablets have given new life to magazines, and as these devices gain traction, we expect accelerated adoption of these devices. Our largest increases in spend for 2012 are in internet (17.8%) and cable TV (10.0%). We expect to see decreases for newspapers (-8.0%), magazines (-3.0%), network TV (-1.0%) and syndication (-12.0%). Marketing services are expected to grow 2.9% in 2012.
With numerous holiday sales events, including scatter campaigns placed for November and December, we are expecting growth in the future. Looking ahead, we expect to see slight increases in network radio adspend of 3%, 2% and 1% in 2012, 2013 and 2014 respectively.
As for popular radio formats, live sports, sports talk and news/talk are reporting strong numbers in latest PPM. The NBA lockout has led to dollars being re-expressed in NCAA football and basketball, and NFL. With the Presidential election being only a few months away, and Republican debates in full swing, we are also seeing a surge in talk programming.
Looking into the 2012 upfront, budgets were released later but we are seeing a majority of the same advertisers who participated in last year’s upfront. Retail, insurance, lawn car and real estate are the lead categories. Streaming audio is experiencing tremendous growth in listenership and, as a result, is included on most upfront submissions. Due to the political and Olympic year, pricing is up 3.0%.
Network TV adspend is expected to decrease by 1.0% in 2012, while 2013 and 2014 are expected to decline by 2.5% and 3.0% respectively. With the Olympics taking place in London, the time difference will mean fewer events airing live than there were for the Vancouver Olympics. NBC Sports Chief, Mark Lazarus, has already promised that more events will be aired live rather than saving the best for tape-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 prerecorded versions. Also, with Comcast-owned sports networks now under the NBCU umbrella, more Olympics coverage will be airing on the rebranded NBC Sports Network.
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 anticipates strong cable spending going forward, with continued increases of 10.0% in 2012, 10.5% in 2013 and 11.0% in 2014.
The 2011 marketplace saw increases in several key categories, which we expect to be carried on annually with increases of 8.0%, 2.0% and 4.0% for 2012, 2013 and 2014 respectively. 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 was strong growth in 2011 for cosmetics and beauty aids, while government, politics and organizations experienced heavy declines in spend.
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.
Spending in 2012 is expected to decline by 12.0%, followed by a 10.5% decrease in 2013 and -11.0% in 2014. The end of The Oprah Winfrey Show and the addition of popular series The Big Bang Theory, Futurama and Law & Order into syndication have shaken up the landscape for the 2011-2012 season. However, overall viewership in syndication has remained relatively flat from last year.
Magazines ended flat in ratecard-reported revenue through 2011, according to the Publishers Information Bureau (PIB). Q4 2011 proved to be a difficult quarter, down 8% in paging against the previous year. PIB saw magazines ad revenue growth in only four of the 12 major advertising categories during the fourth quarter. (Twelve categories are the most significant contributors to PIB revenue, comprising more than 85.0% of total advertising spending). Financial, insurance & real estate was the only double-digit gain, up 18%.
The newspaper industry continued to see declines in 2011. The Newspaper Association of America announced that print advertising revenues fell 10.9% from $5.41 billion in the third quarter of 2010 to $4.82 billion in Q3 2011. Zenith expects decreases in newspaper ad spend of 8.0% in each of 2012, 2013 and 2014.
Zenith predicts total internet ad spending to grow 17.8% in 2012, and 18.7% for each of 2013 and 2014. Online ad growth is being driven, in part, by online video, with video ads “becoming the main form of brand advertising in the digital space”, according to eMarketer. The company says spending growth for online video will run in the 34% to 54% range between 2009 and 2014 – growing from $1.4 billion in 2010 to $5.2 billion in 2014. By 2015, nearly $50 billion will be spent on online ads in the US.
One key online ad format, classifieds, is highly influenced by overall economic attitudes and activity. Classifieds depend on employment and real estate, both of which will likely remain soft markets into early 2012.
Sales of graphical display ads, including banners and videos, are poised to climb 25% in the US this year. Mobile marketing will continue to grow, fueled specifically by ubiquitous apps, user-friendly browsers and 3G/4G speeds. Smartphone ownership now comprises 28% of all mobile phone ownership, with over one million smartphone devices being activated on a daily basis. Publisher growth is also evident with the Apple’s app store having over 400,000 apps and Android with over 200,000. The average number of ads shown per app session is 4.3, and the average session lasts just over four minutes. Moreover, smartphone users now spend more time in mobile apps per day than the average internet user spends online.
The big three social platforms (Facebook, Twitter and YouTube) are all building platforms that are attractive to small businesses in addition to Fortune 500 companies. Social media is creating a new type of advertiser that did not advertise before, including individuals and content creators. Facebook is already commanding more than 25% of the impressions served of display ads. And 34% 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 attributable to social media. YouTube said it now has over 20,000 different advertisers running campaigns, a 100% increase from last year. In addition, 98 out of 100 of Ad Age’s top 100 advertisers are now advertising with YouTube.
Twitter has worked with more than 600 advertisers on more than 6,000 campaigns. Plans are in place to offer an automated ad-buying system for small businesses later this year, which should lead to a torrent of new advertising for the platform. Social media ads should also be expected to increase in price based on current patterns, the influx of new advertisers, new creative formats and improved targeting.
Traditional out of home
Zenith is predicting a 3.0% increase in traditional OOH spend for 2012, and 5.0% for each of 2013 and 2014. Out-of-home advertising revenue grew faster than the economy, as well as many other media, in the third quarter of 2011, rising 4.2% to just over $1.5 billion, according to the latest figures from the Outdoor Advertising Association of America.
Many industry categories, including local services, media, schools, and restaurants performed well through Q3 2011. However, after two quarters of strong growth, the financial category remained flat. Lamar advertising released an interstate travel app in October called RoadNinja, marrying billboard advertising with mobile technology. Advertised on over 1,000 static and digital billboards, potential users are informed of the opportunity to download RoadNinja. This location-based app utilizes Foursquare technology to alert users to the options available at upcoming exits, as well as sales and promotions in their immediate area.
Non-traditional out of home
Zenith predicts that expenditures for nontraditional OOH advertising, such as place-based media and experiential media, will grow 5.0% in 2012, 2013 and 2014. Spending on place-based digital networks in a variety of venues – such as gas stations, malls, gyms, supermarkets, etc. – will increase as stronger, better-adapted networks absorb and gain control of the weaker developing networks, promoting stability across the marketplace.