Advertising and Marketing

Magna Sees Improving Advertising Market

Modest growth expected for national television 5/03/2013 09:49:53 AM Eastern

Media agency Magna Global sees the U.S. advertising market
gradually accelerating following a weak first quarter.

Magna says the television market was slow in the first
quarter with prices on a cost-per-thousand viewers (CPM) basis showing almost
no premium over the 2012-2013 upfront costs, contrary to the double-digit
increases cited by media owners during this week's earnings reports.  In the second quarter, prices are up but
Magna says that is the result of low supply due to poor ratings, rather than a
surge in demand.

In a non-Olympic year, "we anticipate national television
advertising to grow modestly, while local TV will be down and television ad revenues
as a whole will decrease by -2.8%," Magna said. 
Excluding the effect of the Olympics and presidential elections, TV will
be up 1.9%."

Magna's report comes just before the start of the broadcasters'
upfront week. "Many have called for this dated practice to end, in an age where
real-time, data-driven, auction-based, last-minute trading would rule instead,"
Magna said in its report. "The reliance of advertisers and media sellers on the
upfront market, however, has not dissipated, because the predictability and
scale that upfronts provide for both the supply and demand side, remains
valuable for most market players. Buying on the scatter market has almost
always proved more expensive on a CPM basis during the last ten years.

"Not only do the upfront negotiations survive in modern
television, but they seem to be winning new converts in digital media too," the
agency added. " The creation of the 'NewFronts' marks a whole new generation of
digital media owners battling for upfront dollars and supporting a trading
model similar to that of television, for some of their inventory (mostly
video). The question is how successful these 'NewFront' competitors will be in
stealing share from traditional TV or in growing the upfront pie."

Magna expects digital media to be the only category to show
significant growth this year at 11.5%. The agency says the pace of digital
growth should plateau slightly as a result of deflationary pricing trends
affecting display formats.

For all media, Magna projects that ad revenue for core media
owners will grow 0.4% this year, or 2.4% excluding political and Olympic
spending.

For
2014, Magna raised its forecast to growth of 4.9%, or 3.8% excluding political
and Olympic spending.

March