MAGNAGLOBAL has updated its global and US ad revenue forecasts for 2011...
Following an 8.0% rebound in 2010, MAGNAGLOBAL - a division of IPG's Mediabrands - forecast that media suppliers around the world will grow their advertising revenues during 2011 by +5.2% to total USD $428.4 billion on a constant currency basis, revised downward from its previously published expectations of +5.6%.
Long-term growth rates, however, are upgraded, reflecting stronger expectations for emerging markets through 2016. MAGNA's compounded annual growth rate (CAGR) for the global industry is +6.8% over the next five years, compared to previous expectations of +6.3% in late 2010.
Video bounced back strongly in 2010 and continues to be the dominant advertising medium, claiming over 40% of the global advertising market. Traditional television advertising is expected to grow 8.3% on average through 2016, gaining more advertising market share in North America, the world's largest TV market, than in any other region.
Concurrently, MAGNA expects online advertising to overtake newspapers as the second-largest advertising medium by 2012, reaching USD $129 billion in 2016. Technological advancements in ad serving, targeting and measurement, improvements in search quality, and rapid growth of social media will all help the medium attract more investment, MAGNA said.
By contrast, print media will see renewed weakness in 2011. MAGNA now expects a slight decline in revenue for the sector compared to its previous expectation of positive growth of less than 1%.
Over the next five years, however, newspapers and magazines collectively should grow 1.6% on average, an upward revision from MAGNA's previous estimate of 1.2%. The group's radio estimates remain largely unchanged, but out-of-home should continue to see relatively more favorable trends, which will help make it the second fastest growing medium after online over the next five years.
In dynamic USD terms, global advertising will rise by +9.2% during 2011, and continue to grow by a CAGR of +8.1% through 2016. MAGNA currency estimates assume a depreciating US dollar against most other currencies over the next five years.
MAGNAGLOBAL has also updated its US media ad revenue forecast for 2011, revising downwards from +3.1% to +2.9%.
In light of recent economic reports, the group now expects media suppliers to generate $173.1 billion dollars of advertising revenues in 2011, excluding the impact of political and Olympic advertising.
"While we see the disruption from the earthquake in Japan and high gas prices as temporary, the economy still suffers from a depressed housing market, sluggish employment conditions, and fiscal retrenchment at all levels of government," the release said. "Our previous forecasts had already conservatively assumed a slowdown in the second half of 2011."
US online advertising growth exceeded expectations in the first quarter, as the share attributed to national media - primarily reflecting digital display and online video - was significantly higher than recent trends would have predicted.
According to MAGNA, overall US online advertising benefited significantly from strong momentum in online video and social media as large national advertisers begin to invest more in building brand awareness online.
Advertisers are also investing more in paid search, allowing direct online media to outperform expectations, MAGNA said.
For 2011, MAGNA now expect $30.1 billion in online advertising, up by 15.6% from 2010 levels. The group also expects national TV to grow 7.9% in 2011, up from its previous estimate of 6.5%.
Despite upward revisions to national mass media, signs of a slowdown are concentrated in local mass media, driven by weakness in Newspapers, Radio and Outdoor advertising.
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