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A Less Optimistic Outlook for U.S. Ad Spending

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A Less Optimistic Outlook for U.S. Ad Spending

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Group M lowers forecast to 1.8 percent growth this year

By Bill Cromwell

August 15, 2013

Though there have been some economic bright spots for the United States this year, including the decline in unemployment and rebound of the housing market, true recovery is still a ways off, and that’s apparently making companies reluctant to invest in advertising.

A new forecast from GroupM, WPP’s global media investment management agency, slashes its outlook for U.S. advertising growth in 2013.

The report predicts that ad spending will grow by only 1.8 percent, to $156.25 billion, down from the 2.7 percent the agency forecast in December.

GroupM blames economic uncertainty for the cut. Last year, with Olympic and political spending, U.S. ad revenue was up 3.4 percent, to $153.46 billion.

But this year, despite gains, the U.S. economy has been a puzzle, surging in some areas while struggling in others.

Case in point: employment. Unemployment is down to five-year lows, and yet average wages have fallen even as more people have gone back to work.

Retail spending grew 0.2 percent in July, its fourth straight month of growth, but the increase fell below economists’ expectations.

And the housing market has seen sales and housing prices rise, even though some parts of the country, including New York and New Jersey, are still seeing high foreclosure rates.

Little wonder, then, that with the economic signals so mixed, advertisers continue to be wary. Last year, half of the top 10 advertisers in the U.S. decreased their spending compared to 2011, according to GroupM, and only three increased by double-digit percentages.

As for what will be driving the small gains in ad spending this year, it’s once again digital that’s responsible for the majority.

Interactive, which is referred to as interaction by GroupM, will be up 9.5 percent to $13.65 billion. Search, which is pulled out separately in the forecast, will also rise 9.5 percent, to $12.17 billion.

Only two other categories will see growth: Television, up 1 percent to $76.77 billion, and out of home, up 3 percent to $4.06 billion.

Though TV’s growth will be modest, it will account for 49.1 percent of all U.S. ad spending, compared to 16.5 percent for interaction, the second-biggest category.

As for the other traditional media, the forecast remains rather dim. Newspapers will see the biggest decline, off 2 percent, to $16.8 billion, though that’s less than the 6 percent decline they suffered in 2012.

Radio and magazines will be flat to last year at $8.6 billion and $24.18 billion, respectively.

U.S. Ad Spending

2006-2014 ($ Millions)

Media

2006

2007

2008

2009

2010

2011

2012

2013

2014

TV

72,901

71,134

72,007

67,687

70,505

73,020

76,013

76,774

78,770

Radio

10,825

10,365

9,128

8,397

8,058

8,219

8,630

8,630

8,712

Newspapers

33,008

30,674

27,117

22,236

19,604

18,232

17,138

16,795

16,451

Magazines

30,025

31,014

28,835

24,510

23,689

23,689

24,163

24,175

24,405

Out-of-home

3,940

4,148

3,835

3,682

3,680

3,790

3,942

4,060

4,180

Interaction (search)

4,525

6,253

7,072

8,198

9,018

10,100

11,110

12,166

13,322

Interaction (other)

6,693

7,848

8,523

9,116

10,119

11,333

12,467

13,651

14,948

Interaction Total

11,218

14,101

15,594

17,315

19,137

21,434

23,577

25,817

28,270

GRAND TOTAL

161,916

161,436

156,516

143,826

144,673

148,384

153,463

156,251

160,787

Source: GroupM

 

U.S. Ad Spending

2006-2014 (Percent Change)

Media

2006

2007

2008

2009

2010

2011

2012

2013

2014

TV

7.8

-2.4

1.2

-6.0

4.2

3.6

4.1

1.0

2.6

Radio

1.1

-4.2

-11.9

-8.0

-4.0

2.0

5.0

0.0

1.0

Newspapers

-0.8

-7.1

-11.6

-18.0

-11.8

-7.0

-6.0

-2.0

-2.0

Magazines

2.7

3.3

-7.0

-15.0

-3.3

0.0

2.0

0.0

1.0

Out-of-home

8.6

5.3

-7.5

-4.0

0.0

3.0

4.0

3.0

3.0

Interaction (search)

31.3

38.2

13.1

15.9

10.0

12.0

10.0

9.5

9.5

Interaction (other)

36.9

17.3

8.6

7.0

11.0

12.0

10.0

9.5

9.5

Interaction Total

34.6

25.7

10.6

11.0

10.5

12.0

10.0

9.5

9.5

GRAND TOTAL

5.9

-0.3

-3.0

-8.1

0.6

2.6

3.4

1.8

2.9

Source: GroupM

As seen on MediaLifeMagazine.com – A Less Optimistic Outlook for U.S. Ad Spending


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John Paul Strong

John Paul Strong

John Paul Strong combines his two decades of automotive marketing experience with a team of more than 100 professionals as owner and CEO of Strong Automotive Merchandising.

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