2010 brought the advertising world out of its 2009 slump, but now lowered consumer confidence and disrupted global markets make us wonder in which direction the winds are blowing this year.
Jack Myers Media Business Report will be releasing new spending data in September for the 62 media marketing and advertising categories we cover, updating my December 2010 projections. Recent macroeconomic uncertainty has marketers worrying that the resurgence we saw in 2010 is slowing. Market visibility for 4th quarter 2011 is not as clear as it should be, although retail sales, a primary indicator, are performing somewhat better than expected. According to a new STRATA quarterly survey of major advertising agencies, spending decreased during the second quarter, a reversal from the positive growth seen earlier this year.
Jack Myers Media Business Report has forecast a 1.4% increase in total marketing investments across 55 media and marketing categories for 2011. For the first half of the year, spending has been outpacing estimates but there are clear indications of a second-half slowdown. The three advertising categories with the largest increases so far are financial, insurance, and real estate; toiletries and cosmetics; and apparel and accessories. Here's where the money is going:
Digital continues to hit it out of the park, especially search marketing and mobile. Search engine marketing (SME) is poised to be one of the biggest digital hitters, with spending expected to grow by 15.0% this year alone according to a study by Efficient Frontier. That's slightly over the 12.0% predicted by Jack Myers Media Business Report. According to Efficient Frontiers, U.S. search marketing spending grew 17.0% y/y in the first quarter of 2011, while the biggest increases were in retail (22.0%) and finance (18.0%).
On the mobile front, a survey from the Association of National Advertisers (ANA) in partnership with the Mobile Marketing Association (MMA) sees mobile marketing spending increasing by a whopping 59.0% in 2011. Myers is somewhat less bullish, expecting only a 40.0% increase in mobile ad spending for 2011. The latter estimate seems to more accurately reflect the 53.0% of marketers in the ANA/MMA survey who find mobile ads only "somewhat" successful. On the outlandish prediction side, Paul Gelb of Razorfish, a digital marketing and advertising agency, said during an interview with Adweek that mobile ad spending will overtake television. Gelb did not give a time frame for his prediction, but Myers estimates that total TV ad spending in 2011 will be nearly 50 times greater than the total for mobile.
The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers(PwC) announced that Internet ad revenue in the U.S. hit $7.3 billion in the first quarter, marking a 23% y/y increase. Myers originally forecast 16.3% growth for total digital advertising. According to Kantar Media, Internet display spending also went up 14.6% in the first quarter. That's more than double the 6.5% increase predicted by the Myers for all of 2011, but also reflects significant differences in reporting methodology by both the IAB and Kantar, which include video and other forms of digital advertising in their data as well as focusing on data published by the major sites. Myers' also separates "online originated" display advertising and "online originated" digital video advertising from the digital advertising invested with legacy media companies.
The first half of this year generated magazine ad revenue increases of 4% over the same period in 2010, according to the Publishers Information Bureau (PIB), which is administered by the Association of Magazine Media (AMM). For the full year, Myers has projected magazine ad spending growth at 1.4% including 8.5% in magazine digital ad revenues.
Newspapers did not fare as well. Kantar Media notes that the first quarter was the sector's twenty-second consecutive quarter of declining ad expenditures. According to the Newspaper Association of America (NAA), total print ad spending saw a decline of 9.48%. However, total online newspaper ad spending was up 10.6%. Unfortunately, it's still not enough to swing the balance, as total ad spending (print and online) was down 7.0%. Myers has forecast that newspaper print advertising would be down 8.0% for the full year 2011, with newspaper digital revenues increasing 18.0%, for a combined decline of -5.4%.
Radio ad revenue increased 3.0% in the first quarter of 2011, according to the Radio Advertising Bureau first quarter report. The digital trend is in full force in radio with that industry's digital ad revenue reaching $149 million with a 21.0% y/y increase, according to the RAB. Traditional local and national spot radio revenue only grew 1.0% y/y. Original Myers' forecasts anticipated a flat to slightly down year for radio, with digital increases of 20.0% and traditional spot radio declining -1.5%. Local television ad revenues appear to be significantly outpacing anticipated non-election-year declines for the industry according to the Television Bureau of Advertising
Network broadcast ad spending for the full year appears to be on target with Myers' forecast of 4.4% total growth, including both legacy and digital revenues, although published data reports advertising declines of 10.4% in the first quarter. Countering these declines was reported cable TV growth of more than 30.0%. National TV syndication appears to be slightly outpacing Myers original forecasts of 3.4% y/y growth. While the total network TV Upfront market was exceptionally strong, volume was slightly less than originally expected. The Upfront impacts only the fourth quarter in 2011 and advertisers retain the option to cancel a percentage of their commitments.
According to Kantar Media, sports programming, such as the NCAA Men's Basketball Tournament on Turner and college football bowl games on ESPN, was the major player in shifting the game from broadcast to cable.
While ZenithOptimedia reports that 2011 will mark the first time yearly cable network ad spending overshadows yearly broadcast network ad spending, Myers data establishes that transition happened in 2009, when total broadcast network ad revenues (including digital) totaled $17.4 billion and cable networks topped $19.0 billion.
In April, ZenithOptimedia predicted that global ad spending for 2011 will increase by 4.2%. However, last month they downgraded that estimate just a bit to 4.1%, citing political instability and natural disasters abroad. On the up side, Zenith is also forecasting that 2011 global ad spending will hit $471 billion, the same peak level of spending in 2008 before the recession.
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