2013 Ad Spending Forecast +0.7% as Digital Growth More than Offsets Legacy Declines

2013 Jack Myers Advertising Spending Forecast

(Billions)

Read Jack Myers' Overview and Perspective below, plus our 2013-2020 Forecasts

Total media advertising spending increased 4.9% in 2012 to $196.8 billion, including Olympics and political spending but excluding search marketing investments. Jack Myers Media Business Report projects 2013 ad spending will increase a marginal 0.7%, but will rebound steadily with average annual increases of 5.0% in 2014 and 2015, and average compounded annual growth of 6.1% from 2016 to 2020. The full detailed Myers 2010-2020 Marketing and Advertising Investment Report is available to members at www.jackmyers.com. The report includes 52 marketing, advertising and media categories with annual details covering 2010 to 2020.

Growth in advertising investments will be driven primarily from the shift of traditional "below-the-line" promotional spending to digital advertising solutions that offer more efficient capabilities to marketers for coupon distribution, contests and sweepstakes, public relations, loyalty programs, and trade-directed marketing. Total above and below-the-line marketing communications spending increased 0.9% in 2012 and is forecast by Jack Myers Media Business Report to decline 0.8% in 2013, followed by steady annual declines averaging -0.4% from 2014-2020. The decline in total marketing communications investments results primarily from the shift to digital implementation, which can be achieved more efficiently than traditional FSIs, direct mail and offline public relations. Hispanic advertising spending increased 13.3% in 2012 and is forecast by Myers to increase 9.1% in 2013.

Promotional Marketing

Promotional spending declined (-1.7%) in 2012 to $380 billion and is forecast by Myers to continue declining (-3.3%) annually from 2013 to 2015 and (-4.8%) annually from 2016 to 2020. Total promotional investments by marketers are forecast to be $267.6 billion in 2020, a decline of $112.5 billion, while total advertising investments are forecast to increase from $196.8 billion in 2012 to $293.6 billion in 2020, a shift of $96.8 billion into media advertising coffers. Search marketing is forecast to grow 16.7% annually from 2013 to 2015 and 7.8% annually from 2016 to 2020, from $17.3 billion in 2012 to $39.8 billion in 2020.

Digital Advertising

Of the total increases in advertising spending, almost all are being accrued by digital assets. Our detailed digital marketing report will be issued in the next several weeks, and is available to Jack Myers Media Business Report subscribers at www.jackmyers.com. For legacy media such as television, magazines, newspapers, radio and out-of-home, traditional ad revenues sources (TV commercials, print pages, etc.) will decline an average (-2.8%) annually from 2013 to 2015 and another (0.8%) annually from 2016 to 2020. Excluding cable network, cinema and point-of-influence advertising, however, traditional revenues of legacy media will decline (-4.6%) annually from 2013 to 2015 and (-2.4%) from 2016 to 2020.

The digital assets of these companies will more than compensate for these declines, finally putting an end to the myth that the growth of digital pennies do not compensate for the loss of analog dollars. In fact, digital spending generated by legacy media companies will increase from $12.7 billion in 2012 to $15.2 billion in 2013 and to $46.8 billion in 2020.

Total Digital Originated spending (excluding search and excluding the digital revenues generated by legacy media companies) is forecast to increase 30.0% annually from 2013 to 2015 and 20.3% annually between 2016 and 2020.

Total Digital Advertising (excluding search) is forecast by Myers to increase 25.4% annually from 2013 to 2015 and 17.7% annually from 2016 to 2020. The detailed report on digital gains for each legacy and digital-originated media category will be published in a future Jack Myers Media Business Report and is available to members at www.jackmyers.com.

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