TV Advertising to Confront Hard Times in ‘08 and ‘09

The outlook for the global TV advertising market is sluggish growth to 2009 - but some improvement, particularly online, from 2010 to 2012, as TV audiences continue to fragment and online advertising takes a greater share of marketing budgets, according to research from Screen Digest, MarketingCharts reports.

Below, some of the findings released by Screen Digest.

Outlook for 2008/2009

• 2008 will be a difficult year for TV advertising, with spend growing at a lower rate than the economy: that is, just 1.9 percent in Europe and 1.5 percent in the U.S.
• However, TV advertising revenues will enjoy a boost from key events that happen only every four years, including the Beijing Olympics, the European football championship and the U.S. elections.
• Though those events will help avoid a recession for TV ad revenues in ‘08 by neutralizing the effect of the slowing economy, their effect will be temporary.
• By 2009, a fragile advertising environment will have been created, with marketing budgets being slashed, especially in the U.S. - see chart.

“Advertising spending tends to amplify economic cycles - and in some instances it actually anticipates downturns. Although we’re not expecting advertising budgets to be affected this year, thanks to the quadrennial events…we’ll experience the real impact in 2009, which will be the toughest year for advertising revenues,” said Vincent Létang, Screen Digest Senior Analyst and author of the research.

Outlook to 2012

• Advertising revenues will grow below average GDP growth between 2008-2012, with annual growth rates of 3.6 percent in Europe and 3.7 percent in the U.S.
• The growth rate in 2011-2012 will be higher - at 5 percent in Europe and 6 percent in the U.S. - as the economy picks up after 2008/2009.
• Most of that growth will come from online advertising, which is expected to grow on average 17 percent every year until 2012.

“Whilst the overall picture for ad revenues is flat or in decline, two areas will enjoy growth - online will continue to grow at a pace, buoyed up by a strong search advertising market and digital TV channels will be taking a larger proportion of ad budgets by 2012, at the expense of the traditional broadcasters,” said Létang.

MarketingCharts offers more projections from the study.