U.S. ad revenue expected to rise to $170 bil

National TV remains dominant source for advertisers

NEW YORK -- Advertising revenue in the United States is expected to rise 3.4% to $170 billion this year, buoyed by an economy on the mend, according to MagnaGlobal, the research arm of advertising conglomerate Interpublic Group of Cos Inc.

Stripping out political and Olympic advertising, the estimate calls for 2.1% U.S. advertising growth in 2010, up from Magna's previous forecast of 1.6%.

"It does feel like the recovery is real," said Magna Director of Global Forecasting Brian Wieser.

The new forecast should provide some relief to media executives worried about the possibility of a double-dip recession. Several large media companies, including News Corp. (NWSA.O), Walt Disney Co (DIS.N), Time Warner Inc. and Viacom Inc., are set to report quarterly earnings in the coming weeks.

Wieser expects U.S. advertising revenue to grow modestly in the next five years, rising 3.6% annually between 2010 and 2015. He said the banking and health care categories would be key drivers.

At present, though, automotive advertising has provided a much needed boost, he said, especially to local television, where ad revenue is expected to increase 9.6% this year.

National television, including broadcast and cable, remains the dominant go-to source for advertisers. The medium represents the largest share of advertising revenue. National TV ad revenue is expected to grow 4.9% this year to $35.4 billion, excluding the Olympics. Ad revenue for national cable is forecast to jump 7.5%.

"Television continues to grow because largely it is the most cost-effective means of reaching a large audience," Wieser said.

Direct online advertising revenue, which includes paid search, is expected to rise 12.9% to $15.4 billion in 2010.