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Magna Global is forecasting US media owners advertising revenues to grow by 5.1 per cent this year, to $167 billion.
This is a decrease from their previous forecast of 6 per cent (April mostly due to a lower estimate for incremental advertising spend generated by non-recurrent Political and Olympic (P&O) ad campaigns this year, and a softer-than-expected market in Q2.
Excluding those cyclical P&O events, the underlying/normalised growth will be 3.5 per cent this year, (previously 3.9 per cent). Year-to-date, the market grew 3.2 per cent compared to the first half of 2013.
Market growth slowed down significantly in 2014 with most traditional media categories flat or down year-over-year, following a strong Q1. However Magna Global believes the Q2 softness was mostly circumstantial and stronger advertising spending growth should resume in Q3 and Q4.
Television was among the media categories most affected by the Q2 slowdown, with local TV revenues flat year-over-year and English networks ad sales heavily down.
Magna Global believes the dip in TV sales was partly circumstantial (e.g. Olympics pulling budgets in Q1 at the expense of Q2, political spending slower to take off compared to previous cycles) and partly structural (acceleration in the long-term shift of ad dollars towards cable TV, Spanish networks and online video).
Digital media advertising revenues are forecast to grow by 17.4 per cent this year to reach the $50 billion mark. Within digital segments, mobile-based ad sales will grow by 64 per cent (vs. 8 per cent for desktop-based advertising).
Magna Global’s 2015 forecast is increased to 3.3 per cent (core media, incl. P&O), up from 2.4 per cent previously. Excluding P&O effects, growth is forecast to reach 4.9 per cent (previously: 4.5 per cent). This revision is mainly driven by a stronger economic outlook.
This level of growth will be the highest in ten years, bringing the US ad market to a new all-time high of $172 billion (vs. 169 billion in 2007).
Digital media will reach a 34 per cent market share in 2015 driven by social (32 per cent) and mobile (51 per cent). It will outgrow television by 2017, when ad revenues will reach $72 billion (38 per cent market share).
Vincent Letting, Director of Global Forecasting at Magna Global, said: “Despite the dip in advertising spending growth during the second quarter, we anticipate ad demand to pick up in the second half, so that 2014 will grow by 3.5 per cent this year. In 2015, as the economy improves and consumption finally strengthens, the US ad market will enjoy its strongest year-over-year growth in ten years (4.9 per cent) to reach a new all-time high ($172 billion).”