Magna Global Sees 2015 Ad Growth Of 4.9%, Highest Rate In Ten Years
August 27, 2014 at 3:56 AM (PT)
Updated news from MAGNA GLOBAL, which in an updated forcast says the U.S. market will outgrow the previous all-time high of 2007, at $172 billion. The firm expects one in three ad dollars will be spent with digital media.
The highlights of the new data:
- MAGNA GLOBAL is forecasting U.S. media owners advertising revenues (core media) to grow by +5.1% this year, to $167 billion.
- This is a decrease from our previous forecast of +6.0% (APRIL 2014) that is mostly due to a lower estimate for incremental advertising spend generated by non-recurrent Political and Olympic (P&O) ad campaigns this year, and a softer-than-expected market in Q2.
- Excluding those cyclical P&O events, the underlying/normalized growth will be +3.5% this year, (previously +3.9%). Year-to-date, the market grew +3.2% compared to the first half of 2013.
- Market growth slowed down significantly in 2014 with most traditional media categories flat or down year-over-year, following a strong 1Q. However we believe the 2Q softness was mostly circumstantial and stronger advertising spending growth should resume in 3Q and 4Q.
- Television was among the media categories most affected by the Q2 slowdown, with local TV revenues flat year-over-year and English networks ad sales heavily down.
- The dip in TV sales was partly circumstantial (e.g. Olympics pulling budgets in 1Q at the expense of 2Q, political spending slower to take off compared to previous cycles) and partly structural (acceleration in the long-term shift of ad dollars towards cable TV, Spanish networks and online video).
- Digital media advertising revenues are forecast to grow by +17.4% this year to reach the $50 billion mark. Within digital segments, mobile-based ad sales will grow by +64% (vs. +8% for desktop-based advertising).
- MAGNA GLOBAL's 2015 forecast is increased to +3.3% (core media, incl. P&O), up from +2.4% previously. Excluding P&O effects, growth is forecast to reach +4.9% (previously: +4.5%). This revision is mainly driven by a stronger economic outlook.
- This level of growth will be the highest in ten years, bringing the U.S. ad market to a new all-time high of $172 billion (vs. 169 billion in 2007).
- Digital media will reach a 34% market share in 2015 driven by social (+32%) and mobile (+51%). It will outgrow television by 2017, when ad revenues will reach $72 billion (38% market share).