DMN3 Blog

As you know, everything is relative. That’s why 2010 was a relatively good year for advertising expenditures. What’s ahead for 2011 and beyond? Most ad spending followers expect a relatively flat period ahead for time-honored advertising channels…

Compared to 2009 when ad spending fell by double-digit percentages, the modest increase in 2010 was welcome news.  There are differences in estimates of 2010 advertising spending. For example, while eMarketer estimates that ad spending grew by 2.1 percent in 2010 to $127.2 billion, Kantar Media puts the growth at 6.5 percent to $131.1 billion.

This comes after a disastrous 2009 when ad spending dropped by double digits (18.5% according to eMarketer; 12.3% according to Kantar Media).

No matter whom you believe has the best numbers, ad spending remains substantially below its pre-recession peak.  As the U.S. recovers from the economic downturn, advertisers continue to change their mix of advertising mediums as they attempt to follow consumers’ eyeballs.

“The more comprehensive assessment is that increased spending has not benefitted all sectors equally. While television media has recouped their losses from the 2009 advertising downturn, several large segments are still 15 to 20 percent below their 2008 peaks” according to Jon Swallen, Senior VP for Research at Kantar Media North America.

Winners were television, online display advertising (Kantar does not track keyword search advertising); and outdoor advertising.  The big losers continue to be the print medium with small gains for magazines and newspapers declining to a 25 year low in their ad revenue.

Source: Kantar Media

2011 and Beyond:

eMarketer is predicting that time honored, traditional media overall ad spending will level off through 2015, even experiencing a slight dip in 2011. While television and radio will hold their own, more and more advertising dollars will shift to online media, including mobile at the expense of print media.

Interpublic Group’s Magnaglobal forecasts a rosier picture than eMarketer. They are predicting that U.S. advertising spending will rise by 3.1 percent in 2011. This number is nearly identical to their estimate of growth of advertising revenue in 2010. Cable television, online video and mobile marketing are expected to see the highest growth in 2011 according to the report.

Borrell Associates is predicting a similar growth (less than 5%) in overall ad spending for 2011. The growth will be led by online advertising, including mobile. They expect total online ad spending to increase almost 14 percent from $45.6 billion in 2010 to $51.9 billion this year. This increase in online ad spending will be led by social media advertising, targeted advertising, streaming video, local advertising and mobile marketing.

RWS/US. In its 2011 New Business Report: A Client’s Look Ahead at Agencies, reports that 55 percent of U.S. marketers have shifted 30 percent or more of the marketing budget into online advertising over the last three years. Their study indicates that the aggressive digital marketing activity of 2010 will continue in 2011.

According to BrightRoll’s third annual Online Video Advertising Report, media buyers expect to see the greatest increase in ad spending in 2011 in the online video, mobile video and social media.

BIA/Kelsey’s U.S. Local Media Annual Forecast, like eMarketer, predicts a slight (1%) decline in traditional advertising spending. They also forecast strong growth in online media, especially social media advertising revenues. BIA/Kelsey defines social media advertising as “money spent on advertising formats across social networks.” They predict that social media advertising will increase from $2.1 billion in 2010 to $8.3 billion by 2015!

Both eMarketer and Forrester Research, in separate reports, predict that mobile ad spending will exceed one billion dollars in 2011, up 43 percent from 2010. Smartphone adoption and their increasing use by consumers for activities typically associated with PCs is driving the increasing use of mobile marketing and ad spending.

What is notable about these and other studies is that you can expect the shift to digital advertising channels to continue unabated.  Expect robust growth in 2011 and beyond for the following:

• Local online advertising
• Cable television advertising
• Online video advertising
• Mobile advertising
• Social media advertising