Local Ad Spending Down 20% in 2009; Emerging Media Up 5.0%

Media revenues generated through advertising are being forecast to decline 12 percent in 2009 following a 4.2 percent decline in 2008 and compounded by an additional projected 4.0 to 7.0 percent decline in 2010 – more than a 20 percent decline over three years. These new Myers forecasts are based on a composite overview of industry analysts, new data on fourth and first quarter ad spending, the latest GDP figures, and an in-depth analysis of the top 100 advertisers and top ten ad categories conducted by investment firm Goldman Sachs. The data suggests media and other advertising-dependent companies need to brace for challenging times ahead and accelerate initiatives to attract revenues from alternative sources. The full revised Jack Myers Media Business Report Advertising and Marketing Investment Forecast is available at http://www.jackmyers.com/commentary/media-spending-forecasts?c=n (Registration required.) The media that are least impacted by the continuing downturn in ad support are network television, videogame advertising, cinema advertising, online and mobile, although forecasts even in these categories are far less positive than believed even a few months ago. This is the first time Myers has recalibrated forecasts this early in the year. Lower fourth quarter 2008 spending has also pushed full year 2008 results further into the red than originally estimated. Myers is currently projecting an industry turn-around in 2011, but success will be on a company-by-company and market-by-market basis within most traditional media categories and will depend on companies' strategic responses to current industry conditions.

Media company advertising revenues peaked at $234.7 billion in 2007, a year in which the industry grew 3.6 percent. Total ad spending is projected to decline to only $187.7 billion in 2010. Not only is the three year period between 2008 and 2010 the first time advertising has declined in three consecutive years, but it also represents the first time total marketing communication investments are declining.

Marketing spend, including 18 media categories plus direct marketing, consumer and trade sales promotion, event marketing, public relations and ancillary marketing, declined 1.7 percent in 2008 and is forecast by Myers to decline 6.4 percent in 2009 and another 5.2 percent in 2010.

Local media are in a virtual free fall, with consecutive year spending declines of 3.2%, 11.3%, 21.0% and 7.5% beginning in 2007. Newspapers, local television and radio and yellow pages advertising will decline from $115 billion in 2006 to a projected $72.8 billion in 2010. Newspapers alone account for a $21.6 billion loss of revenues with the industry losing more than 50% of its annual income from advertising.

Growth categories include branded entertainment, videogame advertising, online video and mobile are forecast to increase only 5.0% in 2009 and 7.3% in 2010, following a 20.3% growth rate in 2008 and 38.0% growth in 2007. Online display advertising is forecast to decline 2.0% in 2009 and 3.0% in 2010.

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