After several lofty predictions about advertising spending earlier this year, the news lately has been more subdued. Most projections have been revised down, with the exception of online marketing. The latest figures from Barclays suggest a cautious outlook for 2012 as well.
The expected drop in ad spending is all about marketer confidence. Earlier this year, Andrew deClemente at Barclays was looking for a 2.9% increase in ad spending. Now, that number looks more like 1.4%. And for next year, ad spending will rise 4%, a smaller increase than the previously expected 5.2%. Significant spending is associated with the upcoming 2012 election cycle which is a good thing. Outside of election activity, ad spending will only rise 2.5% next year.
Online ad spending remains a huge area of interest for investors as well as industry operators. But Barclays has also reduced its projections for this format as well. In 2011, deClemente sees the online ad market reaching $29.9 billion which is only 14.8% higher than last year. The two biggest components of online in 2012 will be:
- Display $13.2 billion
- Search $15.9 billion
Video will continue to fuel the display category with an expected compound growth rate of 33% through 2015. But, for now, the format accounts for 7% of online spending.
Here are the projected changes in the U.S. ad market for 2011 as Barclays sees it:
- National Broadcast TV (excluding Olympics) 2.4%
- Local Broadcast TV (including politics) (-1.7%)
- National Cable TV 8.1%
- Internet (local and national) 14.8%
- Outdoor 3.5%
- Radio 0.6%
- Magazines (-0.9%)
- Direct mail (-4.4%)
- Newspapers (-6.9%)
- Directories (-16.4%)
diClemente notes that he bases his projections on the correlation between advertising and the GDP/PCE. Additionally, analysts link their higher projections for online expenditures to the continued imbalance between the amount of time consumers spend with those formats and the percentage of ad dollars allocated to that channel. Currently 36% of consumer media time is spent online but only 15% of measured media is spent on online channels.[Sources: Kafka, Peter. Guess What Happens to Advertising. Allthingsd.com. 7 Sep. 2011. Web. 21 Sep. 2011; Blodget, Henry. Media Analysts Begin to Slash Ad Spending Forecasts. BusinessInsider.com. 7 Sep. 2011. Web. 21 Sep. 2011]