Advertising will see a rebound in 2010, but it will be a wimpy one
First the good news: worldwide advertising spending is expected to increase in 2010. The bad news is, the increase forecast by media agency Carat and Magna Global is pretty anemic.
Spending on magazine ads, TV spots and other forms of advertising is expected to inch up just 0.7 percent next year, according to Carat. If that turns out to be the case, it will still be a vast improvement over the 5.8 percent decline this year. Magna Global's Brian Wieser also sees a wimpy comeback for advertising, with spending rising at a compound annual growth rate of 0.9 percent between 2009 and 2014.
Even online advertising, long considered a savior for media companies, is hardly robust. U.S. Internet advertising revenues were at $10.9 billion in the first half of the year, a 5.3 percent decline from the same period in 2008, according to a report by PricewaterhouseCoopers and the Internet Advertising Bureau.
For the full year, spending on Internet advertising is expected to post a 5 percent drop, according to the investment bank Cowen. That's a bummer, as both search and display advertising had showed gains in the early part of 2009. The rebound isn't predicted until next year, when Cowen foresees a 6 percent rise.
The data indicates that advertisers are showing their preference for search over display advertising, PwC's David Silverman told DailyFinance. Search revenue rose during the first half of the year, while display ad spending fell. Meantime, digital video ads did show a gain.
"Generally, it has fared better than traditional advertising," Smith said. He added that marketers are attracted to digital advertising because its effectiveness can be easily quantified, unlike ads in traditional media.
There are other signs of hope for the beleaguered advertising industry.
Several types of products increased their spending in the first half of the year, including motion pictures, wireless companies, quick service restaurants and direct response products, according to the Nielsen Co.
Even newspapers, which are in a world of hurt, appear to be finding some support. Analyst Gordon Borrell recently argued on his Web site that papers will show "a 2.4 percent rebound in newspaper advertising in 2010, and continued single-digit increases over the next several years. By 2014, newspaper ad revenues will be up about 8.7 percent over 2009 levels."
There are some exceptions, however. Radio revenue is expected to plunge more than 15 percent this year, 4 percent worse than an earlier estimate by research firm BIA Advisory Services. Broadcast TV advertising revenue fell 12 percent in the second quarter, according to the trade group Television Bureau of Advertisingg. By Nielsen's reckoning, cable television advertising rose 1.6 percent in the first half of the year, the only medium to post a gain.Though advertising spending is rebounding, to say the market is recovering is a stretch. It's like rejoicing over someone's recovery from a coma. Sure, they are feeling better, but they remain quite ill.