New forecasts from MAGNA, a division of Interpublic Group, highlight that in the past 6-9 months advertisers have increased their outlook for national ad spending for next year.
Overall, US national ad spend is now expected to decrease -1.0% in 2010 versus a previous forecast of -2.9%.
Not surprisingly, the online medium is capturing a disproportionate share of this increase relative to its share of total US ad spend.
MAGNA’s new forecasts are driven by an uptick in national advertising expenditures in the past couple months. The result is better-than-expected performance from national advertising next year, while expectations for local ad spend growth remain the same.
The changes were relatively small (total US spend was increased by about 0.5%). But here are the key trends:
A GREATER-THAN-EXPECTED SHARE OF BUDGETS ARE MOVING FROM MAGAZINES TO VIDEO AND CUSTOM SPONSORSHIPS
Video advertising has been one of the only areas of growth in both traditional and online media during 2009, with marketers embracing professional content providers like Hulu over user-generated sites. In addition, marketers and agencies has noted an increase in spending on “private label media” or “owned propeties,” which falls under a sponsorship buy for most advertisers.
We believe these two trends affect the same types of advertisers that have traditionally been big spenders on magazines–premium national advertisers focused on branding campaigns. As a result, it’s no surprise that a greater share of budgets could be taken from magazines next year in favour of online video and sponsorships.
To be sure, we’re not talking enormous numbers here. The shift in share from magazines to online in the the new forecasts amounts to about $50 million. Still, for new categories like video and social media, it’s the direction that matters. $50 million is also about the same revenue many national magazines generate in a given year.
IRONICALLY, MAGAZINES ARE IN A GREAT POSITION TO CAPTURE ONLINE VIDEO AND SPONSORSHIP DOLLARS
Magazines already have captivated/targeted audiences, strong brands, and growing online properties so they are in a great position to capture any increase in ad spend on video and custom sponsorships. Conversations with publishers indicate many are seeing an uptick in these categories, with some digital divisions selling nothing but sponsorships that incorporate engagment and video.
However, while magazines should see an uptick in online video spend and sponsorships next year, it is inevitable that digital competitors will take a lot of the increased spending. In addition, it will still be difficult for magazines to divert their attention from stabilizing their print businesses to growing their still small digital businesses.