Magna Sees Lower TV Spending in 2013

Media agency revised forecast for national broadcast

By Jon Lafayette -- Broadcasting & Cable, 1/18/2013 10:00:42 AM

Media buyer Magna Global has issued a more pessimistic forecast for TV advertising revenue growth.

Magna says it now expects TV revenues to decline by 2.6% in the U.S. to $13.1 billion. Its previous forecast called for a 1.4% decline in a post-Olympic and post-election year. Factoring out the Olympics, TV spending would be up 2.2%.

The agency says that it made the biggest revision to its forecast for national broadcast, calling for a 2.1% increase versus its previous expectation of growth at a 4.8% rate.

"Since the beginning of the broadcast season in September, the scatter market prices have showed very little 'premium' over the upfront CPM inflation despite the fact that primetime ratings have been weaker than expected (-5% for broadcast networks, -2% for cable networks, on adults 18-49, including sports) and broadcasters had to serve extra spots to meet their guaranteed impact. That unusual pattern reveals weak demand," the agency said. "We expect a similar softness throughout the first part of 2013."

Magna says that English-speaking national network TV will be impacted by these trends, with revenues decreasing by 6.4% (or 1.8% without political and Olympics) in 2013. "National cable will continue to benefit from better ratings and gain market share from broadcast: revenues will thus grow 4.0%," Magna said.

Local TV is forecast to grow 1.4% on a normalized basis and drop 9.1% when including political advertising.

Overall, Magna expects ad spending on what it calls core media to rise by 0.6% in 2013, or 2.7% without the effects of political and Olympic spending. Digital media is expected to have double-digit growth to $41.5 million, with mobile rising 55% to $4.5 billion.

"The concept of mobile advertising started with smartphones but tablets are changing everything, rapidly establishing themselves as universal media players (TV programs, movies, radio, news, magazines) in a way never achieved through 'personal' computers," said Vincent Letang, executive VP, director of global forecasting at Magna.

"Despite the complexities in the ecosystem, the difficult upgrade of media measurement and the painful redefinition of many business models, Magna Global believes we have only scratched the surface of this new world: advertising on mobile devices is forecast to grow to $11.5 billion in the next five years and by 2017 it will represent 18% of total digital advertising and 6% of total media advertising in the U.S.," Letang said.

In terms of spending categories, Magna is expecting technology, personal care and retail to be positive, while ad spending from pharmaceuticals and food will show little or no growth.