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Magna Upgrades 2010 Ad Forecast to 1.3% Decline

Magna has updated its forecast for total U.S. ad spending, actually boosting its prediction for 2010.

Interpublic’s Magna unit said that some improvement in general economic variables caused it to better its forecast, now saying it expects ad revenues to decline by 1.3% next year, to about $159 billion, up from the 2.1% decline it had previously expected. National television ad revenue will improve by 1.3% in 2010, to $32.7 billion, excluding Olympic revenue. That will be up compared with a 6.3% decline in 2009. Digital is expected to grow by 1.1%, up from nearly a 10% decline in 2009.

For Q4, total ad revenue will slip 9% from the same quarter in 2008, a significant improvement over the 18% drop seen in Q109 and Q209 and the 13% drop in Q309, writes MarketWatch.

U.S. ad revenues will see a compounded annual growth rate of 1.2% between 2009 and 2014, Magna predicts.

UBS analyst Michael Morris said last week that he believes the recent ad slump does not represent a permanent change in how marketers reach out to consumers, and says ad revenue will return to pre-recession levels.

Morris based his belief on an examination of trends over the last 30 years, during which time companies consistently spent 2.3 cents on advertising for every $1 of consumer spending.

Morris expects the third and fourth quarters of this year to show advertising improvement, based on the fact that consensus estimates say revenue at the top 100 U.S. ad spenders will rise 3.0% in 2010.