Follow The Money Dep't: IPG's forecast for 5.4% ad spend growth

December 7, 2010 by Dave Haynes

On the heels of ZenithOptimedia’s ad spend forecast comes a separate one from another holding group, IPG MediaBrands and its MagnaGlobal research and analysis division.

It says media companies will see 5.4 per cent growth in 2011, building to a total of $412 billion. More than 40 per cent of that is for video.

As reported in TVNewsCheck …

The 5.4% total was above previously published expectations of +4.2%, and follows 2010’s recovery-year growth rate of +6.9%, also above prior expectations for growth of +5.6%.

It says “The ad-supported media economy is firmly on a path towards sustained gains in most countries around the world, with Argentina, India and China leading the way, more than offsetting declines from the struggling advertising sectors in Greece, Croatia and Ireland.”

Long term growth rates are also upgraded, reflecting stronger expectations of global economic recovery. Its compounded annual growth rate (CAGR) for the global industry is +6.3% through 2016, MagnaGlobal says, with most years upgraded by more than a half percent compared to its forecast published in June of 2010.

Video retains its dominance around the world, with more than 40% of advertising — a total of $169 billion — relying on TV in 2011. Globally, the medium should grow by 7.5% on average through 2016. Online advertising will grow even faster, MagnaGlobal says, overtaking newspapers as the world’s second-largest advertising medium by 2013, and will total $117 billion in 2016.

This will occur largely due to market expansion as new advertisers have become the backbone of that medium. But newspapers will continue to grow modestly — up 1.7% in constant currency terms over the next five years, it says — despite sustained declines in many markets. In many countries, newspapers represent a viable means of distributing content to emerging consumer classes and do not face meaningful cannibalization from online competition.

Magazines face worse conditions with respect to online competition (especially with news and celebrity content), the report says, and should grow by only 0.1% each year through 2016.

Radio and Out-of-Home will grow on a global basis, up by 4.1% and 8.0%, respectively, over the next five years, slightly ahead of growth trends expected for 2011.

Emerging media takes the forefront of MagnaGlobal’s new forecast. It introduced global estimates of mobile, online video and digital out-of-home advertising, along with cinema as platforms which it breaks out within its totals. In 2011, it estimates that online video will capture $4.7 billion in global ad revenues, and should rise by 19.6% each year through 2016, by which point the sector will generate $11.4 billion.

Mobile advertising is smaller, at $2.7 billion, and will grow at a similar pace, according to the report. By 2016, media owners should earn $6.6 billion from mobile advertising. Digital outdoor advertising is increasingly important, but is smaller than mobile in scale in 2011 (at $2.6 billion in ad revenues) and should grow at a slower rate in years ahead, totaling $5.2 billion by 2016.

Cinema captured $2.8 billion in 2011, and will grow at an average rate of 9.1% over the following five years.

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