US adspend to pick up

7 May 2013
NEW YORK: Core US adspend will show a modest growth in 2013 before picking up more quickly in 2014, thanks to a better economic outlook and the boost provided by the Winter Olympics and mid-term elections, according to a new analysis.

The Magna Global US Advertising Forecast predicted core media ad revenues – from TV, internet, newspapers, magazines, radio and out of home – will increase 0.4% during 2013 but this will rise to 5.9% the following year.

"The latest economic forecasts for 2014 may sound like a modest acceleration, but it should be enough to raise confidence to the point where marketers switch from optimization mode to expansion mode," said Vincent Letang, director of Global Forecasting.

"For media owners, especially traditional mass media categories, this means that there is light at the end of the tunnel," he added.

But for the current year, only digital and out of home are expected to show any growth, the former leading the way with an 11.5% uplift and the latter on 3.5%. TV ad revenues, however, will decrease 2.8%, newspapers and magazines will drop 6.8% and 6.7% respectively, and radio will slip back 0.2%.

Digital is again anticipated to be the main driver of growth in 2014, with a 12% increase forecast. TV is expected to pick up 8.9% thanks to increased political adspend and the Winter Olympics in Sochi.

Out of home will also benefit from the mid-term elections, growing 5.4% while radio ticks over with a 1% increase. The decline of newspapers and magazines will continue, shrinking at rates of 7.7% and 5.4% respectively.

Letang noted that digital spending growth had slowed from previous years as the amount available to transfer from other budgets had diminished. "The overall pie doesn't grow significantly," he said.

He also expected a further deflation of display and video ad prices during the year, thanks to an explosion of supply coupled with new trading mechanisms such as programmatic buying.

The growth of mobile was another factor in this deflation, he told AdExchanger, observing that this could account for 13% of all internet advertising in 2013.

"And because the pie is not growing that much, it's at the expense of other digital formats to a certain extent. It's participating in the deflation for traditional digital formats," he concluded.

Data sourced from Global , AdExchanger; additional content by Warc staff
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