TV, Web Break from Slumping Ad Market

Overall, ad spending is expected to rise 3.7 percent in 2012, an expansion due in large part to the injections of spending from the presidential election and Olympics falling in 2012. Those years are always a bonanza for the ad industry. Without the twin big events, ad spending expansion would sit at 2 percent in 2012, a slowdown from the 4.5 percent growth seen last year.

“The shift to digital away from some traditional media, especially newspapers, magazines and radio, is not a one-to-one shift,” said Vincent Letang, head of global forecasting at Magna. “There’s some evaporation in the process. Advertisers can reach their communication goals more efficiently in some cases. The overall pie doesn’t grow as much in the digital age with this evaporation effect.”

That “evaporation effect” clouds a rosy short-term picture for digital media. It raises the question of how long it can rely on growth coming at the expense of weakened direct response categories like directories and a newspaper industry seemingly in free fall. Letang estimates the two categories will continue to lose share for at least the next five years before bottoming out. The Web has certainly done little to dent the primacy of TV. It is growing at a slower rate from the Web, but it boasts a base twice as large.

“TV is also taking money from the other traditional media categories,” Letang noted. “It’s keeping or slightly increasing its share. TV is still a healthy medium in terms of audience and viewing trends.”

The Internet itself has winners and losers, of course. Paid search, already half the market, is due to fare well, expanding 12.6 percent. The two major growth areas forecast are mobile (up 44.2 percent) and online video (22.4 percent).