Ad Forecast: Recovery has arrived and rises long term growth expectations.

MAGNA, a division of IPG’s Mediabrands, released an updated US Media Advertising Revenue Forecast.

In total, we expect media suppliers to generate $164.5 billion dollars of advertising revenues during 2010. On the back of continued improvements in the economy and an increased likelihood of sustained growth in the near-term, MAGNA forecasts that excluding Political and Olympic advertising on TV, on a normalized basis the US advertising economy will grow by 1.6% during 2010, ahead of our prior forecast of flat year-to-year growth. Including Political and Olympic advertising, we expect 3.0% total industry growth for 2010. As expectations for the broader economy have improved over an extended time-frame as well, we are increasing our long-term forecasts, and now expect growth to average 3.5% between 2010 and 2015, up from +2.3% previously.

Increasing population Online leads to sustained gains for Internet; Television retains leadership of advertising share
For the second quarter of 2010, MAGNA forecasts that US media suppliers will collectively generate 2.0% more advertising revenue on a normalized basis than they did when compared to the prior year period, even accounting for the very weak economy experienced in early 2009. Normalized Industry revenues will rise from $40.1 billion in the second quarter of 2009 to $40.9 billion during the second quarter of 2010.

Among the various sectors, television remains the largest advertising platform in the United States. The $54.8 billion dollar segment will grow by 10.2% during 2010, slightly higher than our prior 8.5% expectation. This growth will mostly erase 2009’s 10.5% loss and return the industry to the size it was during 2005.

Online advertising will once again prove to be the fastest growing medium during 2010. We expect 12.8% growth in online advertising revenues, led by 16.8% growth in paid search. Much of this growth will be due to the increasing ease with which many advertisers – especially those who are endemic to the Internet as well as small and mid-sized companies –can accomplish their goals through digital media. While mobile platforms such as the iPad will generate much excitement this year, mobile advertising will generally contribute only limited volumes of incremental advertising dollars to the marketplace. However, sustained innovation and rising levels of internet access – which, per our release on this topic last week, should rise to nearly 100 million households and 80% of the population shortly after 2015 – will support sustained growth of 10.7% for the sector each year through that time. In 2015, online advertising should generate $42.7 billion in total revenues, 21.9% of total industry activity.

Local media is generally likely to perform better than we had previously forecast as well. While we are not modifying our local TV political forecasts – recent court rulings only modify the means by which fundraising will take place rather than the volumes – local TV has proven robust as the automotive sector returns to the airwaves. Local TV should now grow by 16.2% including an expected $2.7 billion of political advertising. Due in part to similar underlying conditions, radio is now expected to grow by 0.6% and outdoor is expected to rise by 3.5%, all improvements from our prior expectations.

MAGNA’S US Advertising Revenue forecast is accompanied by the release of MAGNA’s updated forecasting model, which includes detailed data for more than 40 categorizations of media on a quarterly basis from 1990 to 2011 and on an annual basis from 1980 to 2015. Please contact us for further details.

For more information at http://www.magnaglobal.com/>