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MagnaGlobal Forecasts 3.7% U.S. Ad Growth for 2012 Driven by Elections, Olympics

Republican Debate ABC News December 11 - H 2011
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The ad firm expects a record $3.1 billion boost from the quadrennial events that will offset a weak economy and a slowdown in ad growth in the second half of 2011.

NEW YORK - Advertising firm MagnaGlobal on Tuesday updated its U.S. advertising revenue forecast, predicting that the quadrennial boost from election and Olympics advertising will ensure stronger 3.7 percent growth despite a still-weak economy and a slowdown in ad momentum late in 2011.

That would bring total U.S. ad spending to $152.9 billion.

The company expects a record $3.1 billion boost from political and Olympics spending, including the highest-ever political spending with $2.5 billion just for TV.

After the recession of 2008-2009 and the recovery of 2010, stabilization was the headline news for the ad market in 2011, the company said. "Advertising markets, however, saw a gradual slowdown in growth, which we expect will continue into 2012," it added.

Core media ad revenue, excluding direct marketing categories, grew 2.9 percent in 2011 to $147.4 billion, MagnaGlobal said. That is still 13 percent smaller than what it was in 2007 $168.7 billion.

Media owners’ advertising revenue grew 2.3 percent in the third quarter, but only  1.1 percent in the fourth quarter, compared with a 4.3 percent gain in the first half of 2011, according to MagnaGlobal.

Due to a relaxation of campaign finance rules by the Supreme Court in 2010, super PACs are now allowed to raise and spend almost unlimited amounts on “issue” advertising, which the company sees boosting ad spending this year.

 “These new rules, combined with the intensity of the political battle (evidenced already by the Republican Primaries) and the high number of swing states, are likely to generate the highest-ever political spending in 2012: $2.5 billion just for television,” said Vincent Letang, executive vp, head of global forecasting at MagnaGlobal. “The Olympic Games broadcast will generate an incremental $630 million, bringing the total political and Olympic impact to a record $3.1 billion for television alone”.

Excluding the elections and Olympics, core media advertising revenues would grow 2 percent to $149.8 billion in 2012 – a slowdown compared to 2011’s like-for-like growth of 4.5 percent, MagnaGlobal said.

Broadcast TV spending is expected to grow by 8.5 percent in 2012, while total TV will grow 6.8 percent to $62.4 billion, according to the firm.
After a 21.4 percent improvement in 2011, Internet growth will slow down in 2012 to 10.9 percent, it added.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai