MagnaGlobal Cuts 2012 U.S. Ad Growth Forecast from 4.8% to 2.9%

The company cited a "slow-but-positive economic recovery" and said next year's elections and Summer Olympics will generate incremental ad spending of $3.1 billion.

NEW YORK - MagnaGlobal, a unit of advertising company Interpublic, on Tuesday cut its outlook for U.S. advertising spending in 2012 from previously eyed growth of 4.8 percent to 2.9 percent, citing a "slow-but-positive economic recovery."

The company maintained its 2011 forecast of 1.6 percent growth, predicting that media suppliers will generate $173.5 billion in ad revenue. Excluding direct marketing components, however, revenue growth of core media categories will come in at 2.9 percent this year and 4.3 percent next year, it said.

2011 should play out as previously projected after a mid-year reduction of growth expectations, according to MagnaGlobal.

"Due to persistent weakness in the U.S. economy, however, we have revised our 2012 growth forecast," the company said. "A slowdown in real personal consumption expenditures, manufacturing activity and ongoing problems in the labor and housing markets all contribute to our revised outlook."

MagnaGlobal now forecasts ad revenue to reach $178.5 billion in 2012, "which is still significantly less than the pre-recession level of 2007 of $206.1 billion," it said.

TV will be the fastest-growing medium after online in 2012, with gains of 7.1 percent and 11.6 percent, respectively. The 2012 elections and the Summer Olympics will generate incremental revenue of $3.1 billion for television, with $2.5 billion in political advertising - "the highest spending ever, mostly on local broadcast television," the company said. Its estimates also call for $633 million in spending on the London Olympics, up 5.5 percent compared with Beijing in 2008.

Local media advertising, including local radio and TV, will be pockets of weakness though.
"We now expect this segment to decline 1.1 percent in 2011 and 0.4% in 2012," Magna said.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

 

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