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While ad revenues have struggled to climb back to pre-recession levels, the industry should breathe easier with a presidential election and Olympics on the 2012 calendar. Together politicians and Olympians will boost ad revenues by 3.7 per cent over last year, according to MagnaGlobal’s updated U.S. Media Owners Advertising Revenue Forecast.Last year was slow for the media industry, with ad revenue only increasing by 2.9 per cent to $147 billion. Combined with a small increase in 2010, the domestic ad market is still about 13% below pre-recession levels of $169 billion in 2007, according to the global strategy unit of Interpublic Group’s Mediabrands.
Spending by political campaigns is predicted to reach a record high this year, which should improve revenues, as relaxed campaign finance rules allow Super PACs to raise and spend almost unlimited amounts of cash on political advertising.
“These new rules, combined with the intensity of the political battle (as evidenced by the Republican primaries) and the high number of swing states, are likely to generate the highest ever political spending in 2012: $2.5 billion just for television,” Vincent Létang, MagnaGlobal’s head of global forecasting, said.
MagnaGlobal estimates ad revenue from the Olympics will pull in $630 million in television advertising.
The 2008 Beijing Olympics found a major advertiser in former Sen. Barack Obama, who spent about $5 million to run ads with NBC over the two-week event. Advertising Age reported that Obama’s was the first major network TV buy for any presidential candidate since Bob Dole bought one multi-minute spot in 1996.
Given the reputation of Obama’s campaign, which won him the presidency, it would not be surprising if the Games found themselves with a few more political advertisers this year.
MagnaGlobal estimates that without these quadrennial events, core media revenues would only grow by 2 per cent, a decrease in the rate of growth by 0.9 per cent from an already slow 2011. So while political ads might be annoying in the best cases and destructive at the worst, they may just save the media industry this year.