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Aug. 27, 2014, 11:16 a.m.
Business Models
LINK: blogs.wsj.com  ➚   |   Posted by: Joshua Benton   |   August 27, 2014

Nathalie Tadena in The Wall Street Journal:

Magna Global cut its forecast for U.S. advertising revenue growth this year to 5.1% from 6% on Tuesday, because ad spending the first half of the year was weaker than expected. But the Interpublic-owned media buying and research firm expects the ad market to bounce back in the second half of the year, and see its strongest growth rate in a decade in 2015.

[…]

On a normalized basis, television revenues are expected to grow 2.2% this year. Newspaper and magazine ad revenue are expected to decline 8.9% and 11% respectively, while digital ad revenues are expected to jump 17% this year to $50 billion. Radio sales are expected to contract 3% this year, a larger decline than last year. Outdoor media sales are projected to improve 1.7%, a slowdown compared to the mid-single digit growth rate seen in the past three years.

[…]

Meanwhile, the firm reduced its forecasts of TV ad revenue growth to 2.3% from 3.8% for 2015. Other traditional media formats will benefit from stronger overall ad growth, but will continue to lose market share and ad dollars to digital media next year. Newspaper and magazine ad sales are expected to fall 6.2% and 9.4%, respectively, in 2015. Meanwhile, radio ad sales will improve slightly at 0.5% and out-of-home will rise 3.4% in 2015, Magna Global projects.

For newspapers, continued print advertising declines will mean more pressure on circulation (print subscribers and paywalls) or new revenue (digital marketing services, events) to make up the difference. Most likely, they won’t, and we’ll see more cuts.

If the rate of print ad decline does slow in 2015 (from 8.9 percent down to 6.2 percent down), that would be…semi-good news, I guess, after several years of drops in the high single digits? But there’s nothing here to predict a leveling off, much less a return to growth.

And for all the attention newspapers’ troubles get, those magazine numbers are downright terrible — that’s a predicted 19.3 percent decline in two years’ time.

(“MAGNA GLOBAL is the strategic global media unit responsible for forecasts, insights and negotiation strategy across all media channels on behalf of Mediabrands. Part of Interpublic Group (NYSE: IPG), MAGNA works with the brands within these respective holding companies on behalf of their clients.”)

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