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Zenith Forecasts Further Ad Market Recovery

Media buyer ZenithOptimedia says the advertising business
continues to recover in North America, with TV showing solid gains.

With a boost from the Olympics and the presidential
election, plus a comeback from the auto industry, TV advertising will finish
2012 up 7% to $62.1 billion. TV advertising will rise another 7% in both 2013
and 2014, according to the Zenith forecast.

Zenith says that given its strong performance during the
Summer Olympics, network TV spending is now expected to increase 1% to $17.2
billion in 2012, up the agency's June 2012 projection of a 1% decrease. Zenith
sees broadcast spending declining at an annual rate of 1% in 2013 and 2014.

Cable advertising growth for 2012 was revised down slightly
to 8% in 2012, 7% in 2013 and 7% in 2014. "Cable now draws a larger percent of
ad dollars than network TV, accounting for 12.3% of total advertising spend and
31.8% of total TV spend," the agency notes in a report accompanying its
forecast. "Cable will account for 13.0% of total ad spend and 34.1% of TV spend
by 2014."

Due to a storm of political advertising, Zenith has revised
its 2012 growth forecast for spot TV to 12%, up from 8%. Zenith expects spot to
grow 3% in 2013 and 4% in 2014.

"The 2012 spot TV marketplace is extremely volatile with the
presidential election at hand. Primaries will be pivotal for candidates and the
introduction of the Super PAC has brought political spending to new heights.
This category is not classified as ‘political' on a station's rate card and pays
top dollar to be on air," the Zenith report says. "Political spending is
currently pacing at +90% over the equivalent time period in 2010. This is causing
tremendous volatility on all clients' current schedules and increasing market
pricing for short-term buys based upon demand."

The TV ad market is also helped by a strong comeback in the
auto category, especially local dealers. "There is a strong appetite among
consumers for new vehicles, with many holding off coming out of the recession,
and automakers are offering deals and incentives to entice these consumers."

Zenith expects spending on syndication to be up slightly
(1%) in 2012, flat in 2013 and up 1% again in 2014. "The strength of the comedy
and talk genres, an increase in inventory and strong potential for fall
newcomers all contributed to our revised projections," the agency says.

Meanwhile, "digital ad spending continues to be strong as consumers
spend more time with digital media and advertisers look for new ways to reach
them," Zenith says.

Zenith predicts total Internet ad spending will grow at a
rate of 17.9% in 2012, 18.0% in 2013 and 18.2% in 2014.

"There is intense marketplace competition to develop new
platforms and advance existing ones in an effort to drive scale and improve
effectiveness. The race comes from three directions -- the big five (Apple,
Amazon, Google, Facebook and Microsoft) who are battling it out to establish
full-fledged ecosystems; vibrant startups focused on data, social and mobile;
and traditional media companies looking to elevate their digital offering
(Nielsen, Viacom, NBC, etc.)," Zenith says. "For the next couple of years, hot
topics will include social and mobile advertising, advanced measurement/ad
solutions, cross-platform audience measurement and attribution and industry
adoption of iGRPs and viewable impressions as the common basis for currency."

Zenith forecasts that online display advertising will increase
11.5% in 2012. Display includes banner, sponsorships and rich media and excludes
mobile and social.

For 2012, Zenith expects online video spending to increase
29% in 2012 and continue strong growth, jumping 29% in 2013 and 27% in 2014.

"While TV spending remains strong, marketers are shifting
traditional video into online and other digital formats," the agency said. "The
start of the new TV season will see the fruition of upfront negotiations that
incorporated bits of online video."

Total social media advertising is expected to increase 37%
in 2012, 35% in 2013 and 35% in 2014.

Zenith predicts global ad expenditure will grow 4.6% in
2013, reaching $525 billion by the end of the year. "As has been the case since
the economic downturn began in 2007, this growth will be led by developing
markets, which we forecast to grow by 8% on average in 2013," Zenith says.

Zenith says that North America has had a particularly strong
2012 thanks to record Olympic audiences and heavier than expected political
advertising in the US. Despite the tough comparison, the agency expects 3.6%
growth in North America in 2013.