MagnaGlobal: Politics, Olympics to Drive 4% Ad Revenue Growth in 2012

Looser campaign finance rules could be boon for political spending

MagnaGlobal updated its 2012 U.S. advertising forecast, predicting a 4 percent uptick in year-over-year advertising revenue thanks to the quadrennial effect of political and Summer Olympic-related advertising.

The industry could use the boost. MagnaGlobal estimated that media revenue (excluding direct marketing) grew roughly 3 percent to about $147 billion in 2011. Despite upticks last year and in 2010, the domestic ad market remains 13 percent smaller than its 2007, prerecession level of roughly $169 billion. MagnaGlobal is the strategic global media unit of Interpublic Group's Mediabrands. 

This year, however, media companies will benefit from increased advertising expenditures generated by the presidential, congressional and gubernatorial elections as well as the Summer Olympics.

MagnaGlobal also points to the loosening of campaign finance rules by the Supreme Court in 2010 as a possible boon for the ad industry this year. With super PACs now allowed to raise and spend practically unlimited amounts to run political and "issue" advertising, 2012 could mean unprecedented levels of spending in this area. 

“These new rules, combined with the intensity of the political battle (as evidenced by the Republican primaries) and the high number of swing states, are likely to generate the highest ever political spending in 2012: $2.5 billion just for television,” Vincent Létang, MagnaGlobal's head of global forecasting, said in a statement.