U.S. ad spending once again declined in 2009, plunging 14.7% in the first nine months according to TNS Media Intelligence, the sharpest decline since the Great Depression! Luckily, the recession is over by most accounts, but advertising is expected to see only a modest recovery in 2010, with meaningful recovery not likely until 2011.
Advertising Forecasts: By the Numbers
The top three industry forecasters have made their predictions with regard to where 2009 will net out and what 2010 holds for U.S. ad spending. Here’s what they have to say:
- Adam Smith of Group M: 2009 down 7.8%, while 2010 will see -4% growth.
- Steve King of ZenithOptimedia: 2009 down 12.9%, while 2010 will see -2.6% growth.
* King's figures include Canada
Despite the outlook for the overall ad economy, each medium faces a unique set of challenges with varying expectations for recovery.
Television Outlook: The Jury’s Out on Broadcast…
Television advertising is expected to continue negative growth in 2010. Numbers aside, the big story will be NBC and what happens under new owner, Comcast, especially now that the Jay Leno experiment has been deemed a failure. While there is not likely to be much short-term impact, Comcast will need to invest in programming development and decide whether its goal is to rebuild and challenge for first place among A18-49 viewers or rebrand NBC as a niche network. Other issues facing broadcast in 2010 include continued viewership erosion due to time-shifting and cable gains, CW’s struggle with inconsistent performance across programming, and the end of one of the most influential series of the decade with the finale of ABC’s "Lost" later this Spring.
…But Cable is Looking Up
Cable television is one of the few media that have held up well during this recession, perhaps because it provided a cheap entertainment alternative to things like ball games and Broadway as people tightened their purse strings. This year should bring with it better ad spending numbers, as well as continued increases in viewership, buzz and prestige for basic and premium networks. As a result, Wieser projects cable will grow 4% to 6% in 2010.
Radio Outlook: More Struggles Ahead
Radio has been hit hard by the recession, but this medium hasn’t seen an increase in years. MP3 players, satellite radio and online music providers have chipped away at its audience. Even local traffic reports, once radio’s exclusive domain, have been usurped by GPS devices and e-mail alerts. Radio is trying to adjust to this new world. Still, 2010 will be another bad year. Wieser projects ad spending will slide 4.4%, with declines leveling off by 2011. The big story at this time next year: the fate of Howard Stern, who is in the final year of a five-year, $100 million satellite contract.
Magazine Outlook: Grimmer than Before
Magazines are not likely to ride the wave of recovery in 2010. In fact, this year could be worse in some ways. More titles are expected to fold, probably bigger ones than before. Others will decrease circulation and frequency while raising prices to reduce losses. More titles will also shift into digital publishing. Magna forecasts that ad revenues will drop 6.2% in 2010, with continued but lesser declines through 2014. Circulation declines will not be as severe, but newsstand sales will continue to be impacted by the frugal consumer mindset, which limits impulse purchases.
Newspaper Outlook: Thinner All Around
After a few bad years, things got worse for newspapers in 2009. Advertising and circulation declines accelerated, furloughs became common, layoffs continued and two large metropolitan papers shut down while closure threatened others. Some say 2009 was a bottoming out for the industry, but things aren’t expected to be much better in 2010. More papers will experiment with paywalls for online content and move to online-only publication on certain days of the week. Papers will continue cutting back on content to compensate for staff losses. Magna projects a drop of 9.2% for newspaper advertising this year. On the bright side, there will be fewer layoffs as budgets stabilize.
Outdoor Outlook: A Lot Better
Outdoor saw spending declines in 2009, but this year will bring about positive changes. The Traffic Audit Bureau’s new Eyes On Out of Home measurement system will be used to track the demographics of who actually sees billboards. Outdoor vendors will also implement environmentally conscious initiatives such as eco-friendly bulletins and lighting that consumes less energy. Digital signage will continue appearing on roadsides and in various public spaces like stadiums, gas stations and doctors’ offices. These innovations should aid in recovery; therefore, Wieser anticipates flat ad spending in 2010.
Online Outlook: A Rebound Expected
After years of double-digit growth, online advertising finally felt the pain of other media; however, the web is poised for a rebound in 2010. eMarketer predicts that U.S. online ad spending will rise 5.5% this year, a robust projection compared to most media. Search will continue to drive the medium, but advertisers will also experiment more with video and social media. A few factors working in the web’s favor include its lower out-of-pocket cost as compared to traditional media, its increased reach of mass audiences, its accountability through detailed reporting, and its targeting capabilities, which have increased in sophistication.
Overall, it appears that this will be a better year, with advertisers and consumers starting to spend again. Happy 2010!