Is the Ad Decline worse than first thought?

by Peter Young on December 21, 2008 · 0 comments

Well according to Barclays out in the States – Ad decline is twice as bad as we thought. Whilst the dreaded slowdown/recession is certainly worse than people first feared back in the early parts of this year (2008), bank behemoth Barclays announced advertising in the US is likely to decrease 10%, this is 5% up on Octobers’ figure of a 5% drop for 2009.

Unsuprisingly, online ad spend is still forecast to increase (we do keep hearing that don’t we), with search advertising again being the major driver – unsuprising given the accountability in comparison to many other online and traditional offline channels, something any marketeer requires during difficult time such as this. However when one looks at the forecast below – it makes stark reading.

Broadcast Television Networks: We are lowering our Broadcast Television Network advertising revenue estimates for 2009 and 2010 to down 10.0% and up 3.0%, respectively. Our previous estimate was for down 8.0% in 2009. We expect the national broadcast advertising marketplace will hold up better than local.

TV Stations: We have lowered our broadcast TV local and national spot estimates for 2009 and 2010 and now estimate a decline of 15.5% in 2009 and a decline of 1.1% in 2010. Previously, we were anticipating a decline of 8.9% in 2009.

Cable Networks: We are lowering our estimates for 2009 and 2010 Cable Networks advertising revenue to down 3.0% and up 5.0%, respectively, given the deteriorating consumer economy. Previously, we estimated revenue growth of 1.8% for 2009.

Newspapers: We are cutting our 2009 and 2010 newspaper advertising revenue forecast to down 17.0% and down 7.5%, respectively, vs. our prior 2009 estimate as of one month ago down 14.0% and down 12.0% as of our ad forecast report in October. Specifically, in 2009, we estimate retail down 11.0%, national down 17.6%, and classified down 27.9% (help wanted down 44.7%, auto down 37.5%, and real estate down 28.8%). In 2010, we estimate retail down 5.0%, national down 7.0%, and classified down 13.5% (help wanted down 15.0%, auto down 12.5%, and real estate down 12.5%).

Radio: We estimate radio advertising revenue to decrease 13.0% overall in 2009, below our prior estimate of a 7.4% decline, and now expect down 1.7% in 2010.

Yellow Pages: We have lowered our expectations for 2009 to down 13.0% vs. our prior estimate of down 9.0%, and now expect down 7.0% in 2010.

Outdoor: We are lowering our estimates for 2009 and 2010 Outdoor advertising growth to declines of 6.0% and 4.4%, respectively. Previously, we estimated flat revenue growth in 2009.

Direct Mail: Given mounting cyclical pressures, we are expecting direct mail to decline 8.5% in 2009 (vs. our prior down 6.0% estimate) but increase 2.5% in 2010.

Magazines: We estimate magazine advertising revenue to decrease 15.0% in 2009 (vs. our prior down 12.5% estimate) and decline a further 5.0% in 2010.

For many advertisers and agencies this could make stark reading, with many traditional channels forecasting significant reductions in budget – I would suggest there could be some hard times ahead particularly for agencies merely focussing on offline.

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