Despite the stock market's double digit drop in the last quarter, media agency ZenithOptimedia remains fairly optimistic about U.S. advertising spending and sees particularly big gains for cable television.
ZenithOptimedia is projecting a 2.2% increase in advertising for 2011, up from the agency's 2.1% forecast in July. ZenithOptimedia is also forecasting 3.5% increases in both 2012 and 2013.
For TV, the media agency sees cable growing 12% this year, while the broadcast networks decline 2% and syndication slips 4%.
ZenithOptimedia says its projections take into account current economic conditions and its knowledge of its clients' plans for the upcoming season.
The agency also observes that woes on Wall Street often are not followed by an ad market decline. The agency looked at 12 market crashes over the past 31 years. Most recently, "the sharp drop in the Dow in the U.S. after September 11 did not prevent the recovery of growth in 2002, though growth remained weak," the agency said. "In all, half of the stock market crashes preceded an advertising downturn, but half did not."
TV dollars will grow in 2010, but ZenithOptimedia is predicting that cable will garner a larger share of spend in 2011 and beyond.
Network spending was down year-to-year in the first quarter of 2011 because of the absence of the Olympics, fewer March Madness men's basketball games on CBS, and the shift of college football bowl games to cable. ZenithOptimedia predicts that network TV will end the year down 2%, a revision of its July forecast that spending would be flat. The agency also predicts a 1% decrease in 2012 despite the return of the Olympics to NBC.
ZenithOptimedia expects that 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. The forecast calls for cable to grow 12.0% in 2011, 10.0% in 2012 and 10.5% in 2013.
The spot TV marketplace during the first half of 2011 was robust and strong in many categories, according to the agency. Unfortunately, high gas prices and a decline in consumer confidence have resulted in local markets slowing in the flow of business.
The agency expects the spot marketplace to be extremely volatile in 2012 with the presidential election year cycle generating a billion dollars or so in political spending. Adding to the frenzy will be the Olympics in August, bringing new and returning business to the local markets.
All considered ZenithOptimedia expects spot to TV to turn in annual increases of 4.0% in 2011, 8.0% in 2012 and 2.0% in 2013.
With Oprah gone and Regis leaving soon, the agency expects significant declines for spending in syndication beginning at 4% in 2011 and growing to 12% in 2012 and 10.5% in 2013.
ZenithOptimedia predicts growth in ad spending on the Internet, which is being driving by online video. Video ads are "becoming the main form of brand advertising in the digital space," the agency says, adding that the streaming video category will see two out of every five ad dollars coming from local advertisers. The agency projects 12.6% Internet ad revenue growth in 2011, 16.2% growth in 2012 and 17.3% in 2013.
ZenithOptimedia has made a small reduction to its forecast for global ad expenditure growth in 2011 to 3.6%, which is 0.5 percentage points lower than the forecast it made in July. The slowdown in economic recovery in the developed markets, coupled with rising fears of double-dip recession, have caused some advertisers to trim back budget increases planned for the end of 2011, but there has been no sign of the cancelled campaigns and sharp budget cuts that signaled the beginning of the last advertising downturn in 2008, the agency says.
The agency is predicting 5.3% growth in 2012, down from 5.9% in its previous forecast and 5.5% in 2013, down a click from 5.6%.
TV's share of total ad spent was 38.4% in 2010 and should grow to 39.8% in 2011 and settle at 40.5% by 2013.