Ad Spending Will Grow 3% in 2007 and 7% in 2008: New Myers Forecasts

Suggestions of Ad Recession Are Misguided

Full details on Myers spending estimates and forecasts from 2006 to 2009 for 18 media categories and six marketing categories are available at www.jackmyers.com

Reports from TNS Media Intelligence and other forecasters suggesting the U.S. ad industry may be entering a recessionary period are grossly misleading because they focus exclusively on traditional media such as television, newspapers, radio and online and fail to pick up on the shift of marketers' budgets to untracked categories such as cinema, mobile, videogame advertising, branded entertainment, satellite radio and custom publishing.

These categories will grow a projected 20.3 percent in 2007 and an additional 18.4 percent in 2008 and 18.5 percent in 2009, according to new advertising and marketing forecasts issued today byJack Myers Media Business Report. These non-traditional media grew nearly 23 percent in 2006, delivering $25.2 billion to media company coffers, or 11.3 percent of total 2006 ad expenditures of almost $223.8 billion.

Conversely, 12 traditional media including yellow pages and online will increase less than one percent in 2007 according to Myers, but will rebound in 2008 with 5.2 percent growth (driven heavily by political advertising) before softening again in 2009 with only .4 percent growth. Excluding online advertising results in a revenue loss of .6 percent in 2007 for traditional media and a loss of 2.6 percent in 2009. Further eliminating out-of-home and place-based media, which are experiencing solid annual growth, translates into spending declinesfor ten traditional media of .9 percent in 2007 and 3.0 percent in 2009. 2008 spending increases 3.3 percent.

Combined, the 18 media categories are projected to increase 3.1 percent in 2007, down from Myers' original forecast, issued last December, of 3.7 percent. Myers forecasts that overall media advertising will increase 6.9 percent in 2008 and 3.1 percent in 2009. Myers has been issuing advertising and marketing expenditure forecasts since 1989 and has been rated as the industry's most consistently accurate forecaster.

Total direct marketing, promotion and advertising budgets will grow an estimated 3.6 percent in 2007. Total marketing communications investment growth will slump in 2009, however, to only .3 percent, with media advertising gaining 3.1 percent. The greatest year-to-year marketing decreases are in the nebulous "other" category, which includes local sponsorships, charitable contributions, and executives' discretionary budgets.

While Myers projects overall ad spending will stay on the positive side through 2009, forecasts for consumer and trade sales promotion are less bullish, with slight declines forecast in 2008 and 2009. Some of these declines result from re-positioning of Procter & Gamble budgets for in-store marketing as advertising rather than trade allowances. Myers also projects robust annual growth of 15 percent in 2007 and 2008 for event marketing, which is also pulling budgets away from sales promotion. Several major media companies, especially consumer magazines, are targeting event budgets by creating co-branded opportunities for marketers to combine magazine ads with relevant consumer-focused events.

Myers projects the largest declines in ad spending will be suffered by newspapers, which will lose 4.6 percent in ad revenues in 2007, 2.4 percent in 2008 and 4.5 percent in 2009. Broadcast network TV will increase 2.0 percent in 2007 and 3.2 percent in 2008, but Myers believes they will adjust downward in 2009, losing 4.0 percent. Local and national spot TV, which is the greatest beneficiary of political spending, is forecast to gain 13.5 percent in 2008 after declines of 6.0 percent this year. Terrestrial radio will decline 2.0 percent in 2007 and rebound with 2.5 percent growth next year before declining 4.0 percent in 2009.

Internet advertising, including search and video, is projected to increase 20 percent to $16.7 billion this year, with 24 percent gains in 2008 and 28.5 percent growth in 2009, Myers forecasts. The increased growth will result from a shift of advertisers' budgets from television to online video, although networks will be a primary beneficiary of these dollars.

Full year-by-year details on Myers' spending estimates and forecasts from 2006 to 2009 for 18 media categories and six marketing categories (including promotion, events, public relations and direct mail) are available (no cost) at www.jackmyers.com.