MAGNAGLOBAL: Upward revisions to global advertising revenues after a slowdown in 2011

MAGNAGLOBAL, a division of IPG’s Mediabrands, releases an updated Global advertising forecast alongside a comprehensive model including data for more than 60 countries covering years 2000 to 2016.

Following an 8.0% rebound in 2010, we forecast that media suppliers around the world will grow their advertising revenues during 2011 by +5.2% to total USD$428.4 billion on a constant currency basis, revised downward from our previously published expectations of +5.6%.

Long-term growth rates, however, are upgraded, reflecting stronger expectations for emerging markets through 2016. Our compounded annual growth rate (CAGR) for the global industry is +6.8% over the next five years, compared to previous expectations of +6.3% in late 2010.

Video bounced back strongly in 2010 and continues to be the dominant advertising medium, claiming over 40% of the global advertising market. Traditional television advertising is expected to grow 8.3% on average through 2016, gaining more advertising market share in North America, the world’s largest TV market, than in any other region. Concurrently, we expect online advertising to overtake newspapers as the second-largest advertising medium by 2012, reaching USD$129 billion in 2016. Technological advancements in ad serving, targeting and measurement, improvements in search quality, and rapid growth of social media will all help the medium attract more investment.

By contrast, print media will see renewed weakness in 2011. We now expect a slight decline in revenue for the sector compared to our previous expectation of positive growth of less than 1%. Over the next five years, however, newspapers and magazines collectively should grow 1.6% on average, an upward revision from our previous estimate of 1.2%. In many emerging countries, particularly in those where literacy rates are rising and the threat of online substitutes remains limited, newspapers remain a popular medium to distribute content to consumers. Our radio estimates remain largely unchanged, but out-of-home should continue to see relatively more favorable trends, which will help make it the second fastest growing medium after online over the next five years.

In dynamic USD terms – important to a media owner or advertiser who does not hedge currency exposure – global advertising will rise by +9.2% during 2011, and continue to grow by a CAGR of +8.1% through 2016. Our currency estimates assume a depreciating US dollar against most other currencies over the next five years.