Current Ad Spending Forecasts are Obsolete and Worthless

Originally published October 2010It39s time to completely trash the current ad spending forecasting models used by the media industry agencies marketers and investors I am now in the process of restructuring my industry forecasts and will be reissuing new data that better reflects the digital revenue potential of traditional media companies recognizes the integration of digital and traditional distribution platforms incorporates the growth of interactive and applicationsbased media and collapses the historic barriers between aboveandbelowtheline marketing communications expendituresFor example printonly consumer magazine advertising spending which declined more than 15 between 2000 and 2010 is projected to decline at least another 10 to 20 by 2020 However new forecasts being developed by Jack Myers Media Business Report will reflect a radically different magazine industry outlook projecting that multiplatform consumer magazine ad spending will increase by more than 40 by 2020 This new data will offer investors and corporate management at Time Inc Hearst Condamp233 Nast Hachette Rodale and the many companies gathering this week at the American Magazine Conference a radically different perspective on their industry39s growth prospectsYou are receiving this email as a corporate subscriber to Jack Myers Media Business Report Redistribution in any form except among approved individuals within your company is prohibited As a subscriber you have full access to all archives and reports at wwwjackmyerscom If you require your ID and password contact maryannjackmyerscom Similarly traditional broadcast network television advertising is currently projected to decline 15 to 14 billion dollars between 2010 and 2020 However Myers39 new data will project 50 ad spending growth valuing the total multiplatform ad inventory of ABC CBS NBC Fox CW Univision and Telemundo content at more than 26 billion dollars in 2020Myers advertising and marketing forecasts have historically been the most inclusive incorporating 19 media categories and an additional nine quotbelowthelinequot marketing categories such as promotion direct marketing public relations and event marketing The leading economic forecasters from major agency holding companies and investment advisors include 12 to 19 media categories dramatically underreporting total advertising investments and often completely ignoring several belowtheline budgetsThe integration by traditional media of search online video mobile experiential and social media into their offerings blurs the boundaries between above and belowtheline marketing Facebook advertising reported at 175 billion this year is being underwritten from public relations display advertising search advertising direct marketing and promotion budgets As video is further incorporated into Facebook how should Facebook advertising be classified And if nearly 2 billion is included in ad spending data that does not commensurately reflect declines in other categories it is artificially inflating total reported ad spending dataSeveral of the leading forecasters and financial analysts fail to include online video and mobile advertising in their current forecasts They will in the future Those who currently include them such as Myers have incorporated these digital revenues in separate online video and mobile advertising categories that fail to reflect the percentage of these revenues that are generated by traditional television radio and print companies This results in an unfair negative perception of the future shareholder value of traditional media companies and fails to reward them appropriately for investments in digital growth opportunitiesConsumer sales promotion is a 143 billion dollar business in 2010 representing more than 20 of marketers39 total communications investments Most of these dollars are spent for distribution of coupons and product samples instore marketing and consumer incentives Myers projects marketers will increase their promotional spending to more than 160 billion by 2020 A meaningful share of these dollars will underwrite the growth of mobile appsbased and interactive media especially as mobile technology enables direct redemption of coupons via mobile devices at retail outletsAgain analyses of mobile and interactive media advertising growth that are based on these expanded capabilities but that do not accurately report the sources and distribution of these revenues are using partial and misleading economic insightsJack Myers Media Business Reports39 new forecasts available exclusively to subscribers are due to be published in early December and will include at least 29 total media and marketing communications categories They will collapse the outdated aboveandbelowtheline designations to accurately reflect the integration and distribution of marketers39 advertising promotion direct marketing and social media expenditures Separate categories are being included for Videogame Advertising Social Media PointofInfluence and GPSBased Advertising Interactive VOD and Addressable TV Advertising and ExperientialEvent MarketingSeveral traditional categories will be updated such as Online Display Advertising which will be revised to quotOnline Network Display Advertisingquot This subtle but important shift will enable appropriate financial analysis of the share of display ad expenditures generated by those sites that sell their own inventory vs the hundreds of thousands of sites that generate pennies from inventory sold through online ad networksThese new Myers forecasts will include annual data through 2013 and will also provide longrange expenditure forecasts for 2020 to serve longterm corporate and investor planning requirements Some Myers data may serve as a wakeup call for venture capitalists and investors who are overprojecting the growth potential of earlystage companies and underprojecting the longterm growth prospects of traditional media

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Current Ad Spending Forecasts are Obsolete and Worthless

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