MagnaGlobal now expects media suppliers to generate $173.1 billion dollars of ad revenues in 2011—that’s downward from +3.1% to +2.9%, excluding the impact of political and Olympic advertising. While the company sees the disruption from the earthquake in Japan and high gas prices as temporary, the economy still suffers from a depressed housing market, sluggish employment conditions, and fiscal retrenchment at all levels of government. Their previous forecasts had already conservatively assumed a slowdown in the second half of 2011.
It’s not all bad news, as Magna expects National TV to grow 7.9% in 2011, up from its previous estimate of 6.5%. However, despite upward revisions to National Mass Media, signs of a slowdown are concentrated in Local Mass Media, driven by weakness in Newspapers, Radio and Outdoor advertising. Direct Media (Internet Yellow Pages, Paid Search, Lead Generation, Directories, and Direct Mail) has been particularly impacted by sharper declines in Directories and a slowdown in Direct Mail.
The multi-year trending:
Online ad growth also exceeded expectations in Q1 as the share attributed to national media (primarily reflecting Digital Display and Online Video) was significantly higher than recent trends would have predicted. Though some premium display publishers may have seen a slowdown stemming from the broader economy, National Online advertising overall benefited significantly from strong momentum in online video and social media as large national advertisers begin to invest more in building brand awareness online.
Many of these advertisers are also investing more in Paid Search, allowing Direct Online Media to outperform our expectations. We believe recent improvements made in search quality have benefited the sector and many more monetization opportunities exist in social media. Online advertising, and Paid Search in particular, was likely helped by continued growth in e-commerce, which accelerated during the first quarter by 17.5% compared to the prior year period. For 2011, MagnaGlobal now expects $30.1 billion in online advertising, up by 15.6% from 2010 levels.