Cable Shines in Zenith Ad Forecast

Overall Ad Growth of 3.5% Expected in 2012

Media agency Zenith Optimedia is expecting increases in advertising spending of 3.5% in 2012 and 2013, according its latest forecast.

The increases come on top of a year of recovery in 2011 that should see advertising grow 2.2%, according to Zenith.

Among the media expected to see good gains in 2012 are national cable, up 10% and, thanks to an election year, spot TV should gain 8%. Network is expected to drop 1%, while the forecast calls for a 12% decline in syndication.

Zenith says cable will have a larger share of ad spending than the broadcast networks in 2011, and that that trend will continue for the foreseeable future despite the Olympics returning to NBC in 2012.

"Cable networks will continue to build momentum - especially those seen as alternatives to broadcast prime (USA, TBS, TNT, FX), largely thanks to the return of big-spending automotive and financial advertisers," according to Zenith forecast.

By contrast, Zenith noted, "In real terms, the broadcast networks are not making the same ad dollars as they did several years ago. In an effort to generate new streams of revenue, networks are looking to licensing and retransmission fees."

On a global basis, Zenith expects the ad market to grow 4.7% in 2012 following a 3.5% gain in 2001. The Olympics, U.S. elections and a recovery in Japan are adding $7 billion, or 1.6 percentage points to the gains.

"The global ad market is therefore remarkably strong at a time when the eurozone threatens to fall back into recession and drag down the growth of its trading partners," according to the Zenith forecast. "That's because advertisers are in a very different position now than they were at the start of the last downturn in 2008. In general, advertisers have built up large cash reserves and - thanks to exceptionally loose monetary policy in the developed world - are earning very little interest on this cash."

The agency added that "marketers have the lessons of the last downturn fresh in their minds, in particular the fact that downturns are a great time to expand market share. During an economic downturn consumers fundamentally reassess their spending habits, partly to save money, and partly as a way of treating themselves to affordable luxuries in times of gloom. Brands that gain the loyalty of consumers in a downturn can reap the benefits for years to come. We therefore expect advertisers to invest their cash reserves in competition for market share, and as a way of stimulating extra consumption."