Magna Tempers Ad Outlook

NEW YORK Magna has issued an updated media outlook for 2010, forecasting a lesser decline in the advertising market than it had earlier anticipated.

Citing improvement on the industrial production front, Magna improved its forecast slightly, reporting that it now anticipates normalized advertising revenues to decline 1.3 percent next year. Earlier this year, Magna indicated that it expected a 2.1 percent drop in 2010.

All told, Magna expects suppliers to generate $159 billion in advertising revenue next year, as the economy begins its recovery from four straight quarters of recession.

Among the sectors looking to show marked improvement in 2010 are national TV, which Magna predicts will grow 1.3 percent, to $32.7 billion, and online/digital, which is expected to improve 1.1 percent to $5.64 billion. Magna also believes that national magazines will begin to stanch the bleeding, dipping 6.2 percent to $14.6 billion, versus a 19.2 percent decline this year ($15.5 billion).

Network and satellite radio will also get back into gear, as suppliers are expected to invest $1.08 billion in the medium, a dip of 0.9 percent from this year’s $1.09 billion spend. (Per Magna, national radio will close out the year down 10.6 percent.)

Magna’s analysis excluded political and Olympic dollars.

Along with consumer spending, industrial production is once of the most scrutinized economic indices among analysts looking to gauge the health of the advertising market. Magna notes that while consensus forecasts for consumer expenditures have not changed in a meaningful way, expectations for industrial production have improved. 

(After consumer confidence seemed to rally in September, indicators for the first two weeks of October suggest another downward shift is in the offing. Analysts are particularly concerned by CPG giant Johnson & Johnson’s disappointing Q3 sales figures.)

Magna noted that its long-term forecasts remain in line with prior expectations, as it continues to see ad revenues improving by a compounded annual growth rate of 1.2 percent between now and 2014. In that period, Magna sees national TV growing by a CAGR of 2.8 percent, while digital will expand by 5.3 percent. Magazines are expected to decline 2.8 percent.

Yesterday, UBS analyst Michael Morris said signs of modest improvement in retail “will encourage retailers to increase advertising to compete for share of still shaky demand.” In September, sales inched up 1.1 percent, the first such growth in 13 months.

According to TNS Media Intelligence, retail advertising represented 14 percent of all U.S. ad spending in 2008.

See also: “Some Light, But How Long Is the Tunnel?”

Nielsen Business Media

Publish date: October 13, 2009 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT