Magna Global says the US ad market is accelerating gradually, following a weak first quarter. Ad revenues are expected to grow 0.4% this year, or 2.4% excluding cyclical Political and Olympic (P&O) spending, in line with previous expectations. Magna Global is upgrading its 2014 forecast to 5.9%, or 3.8% excluding cyclical P&O spending, as the economic prospects appear more robust. Digital media will be the only category to grow significantly this year. Magna Global’s 2013 estimates are slightly down from those reported in January.
Following a strong Q4 ‘12 which was driven by political spend, the expectation is that radio advertising will revert to flatter growth in Q1 and Q2 (FY forecast is -0.2%). Outdoor advertising grew +4.2% in 2012, partly attributable to political spending in the second half of the year. Without that driver, we foresee smaller growth in the first half of 2013, and +3.5% on a full year basis.
Magna says the television ad market – still the largest segment in all media – was slow in Q1 with CPMs on the scatter market showing almost no premium over upfront pricing set last summer. Q2 pricing has improved, largely because a low supply of rating points has forced up prices. TV ad revenues as a whole will decline in 2013 2.8%; if strong 2012 political and Olympic dollars are subtracted, TV ad revenues will inch up 1.9%. Digital will show 11% growth this year and 12% in 2014, while print is expected to slip as newspaper advertising should drop 6.8% this year and 7.7% in ’14.
Not only do the upfront negotiations survive in modern television, but they seem to be winning new converts in digital media too. The creation of the new fronts marks a whole new generation of digital media owners battling for upfront dollars and supporting a trading model similar to that of television, for some of their inventory (mostly video). The question is how successful these new front competitors will be in stealing share from traditional TV or in growing the upfront pie, noted the report
The TV ad market was slow in Q1, with CPMs on the scatter market showing almost no premium over the 2012/2013 upfront cost increases. Pricing is up in Q2, but Magna believes this is mostly the result of low supply due to poor ratings, rather than a general surge in demand. They anticipate national television advertising to grow modestly, while local TV will be down and television ad revenues as a whole will decrease by -2.8% (+1.9% ex-P&O).
Digital media will be the only category to show significant growth this year (+11.5%), although the pace of growth should plateau slightly as a result of deflationary pricing trends affecting display formats.
Magazines continued to suffer in Q1. Advertising pages were down -4.9% during the quarter, and Magna believes ad revenues decreased in a similar manner, as CPM inflation barely makes up for audience erosion (full year forecast is -6.7%).
Outdoor will have a somewhat slower 2013: up 3.5% versus its 4.2% gain in 2012, which was strong because of political ad spending.
