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U.S. Ad Growth Forecast at 2.4 percent, TV Better in 2014

8 May, 2013 By: Doug McPherson

NEW YORK – Media agency forecasting unit Magna Global says U.S. core media owner growth will inch up 0.4 percent by the end of 2013, climbing at a much better 5.9 percent next year.

Key findings include:

  • The U.S. advertising market is accelerating gradually, following a weak first quarter.
  • Core media owners’ ad revenues will grow 0.4 percent this year, or 2.4 percent excluding cyclical political and Olympic (ex-P&O) spending, in line with previous expectations.
  • Magna Global is upgrading its 2014 forecast to predict a 5.9-percent jump (or 3.8 percent ex-P&O), as economic prospects appear more robust.
  • Digital media will be the only category to grow significantly this year. Television is expected to recover in 2014.

Magna’s report says the latest economic forecasts have confirmed that the U.S. is on a slow but steady trajectory towards recovery. Four months into 2013, there are clearer signs that this year will show moderate economic growth, despite fiscal austerity and uncertainty that plagued the beginning of the year.

Although consumers and businesses will remain cautious in the short term, fiscal austerity has not broken the recovery, so Magna maintains a prediction of 1-percent ad revenue growth this year. That growth rate translates into 2.4 percent ex-P&O for core media advertising (TV, radio, Internet, out-of-home, magazines and newspapers) while traditional direct media (directories and direct mail) continue to underperform.

Magna called the TV ad market “slow” in the first quarter, with costs-per-thousand on the scatter market showing almost no premium over the 2012/2013 upfront cost increases. Pricing is up in the second quarter, but Magna believes this is mostly the result of low supply due to poor ratings, rather than a general surge in demand. Magna anticipates national TV advertising to grow modestly, while local TV will be down and television ad revenues as a whole will decrease by 2.8 percent (but rise 1.9 percent ex-P&O).

Digital media will be the only category to show significant growth this year (+11.5 percent), although the pace of growth should plateau slightly as a result of deflationary pricing trends affecting display formats.

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