Barclays: Ad Revenue to Shrink 10% in ’09

NEW YORK Barclays Capital on Thursday issued the most dire near-term forecast for the advertising industry to date, warning investors that the business will shrink by 10 percent in 2009.

The firm now projects that total U.S. ad dollars will come in at $252.1 billion next year, down from $280 million in 2007. That’s a pronounced drop-off from Barclay’s October estimates, which had overall ad spend declining 5.5 percent in 2009.

Local advertising is likely to get the short end of the stick, with Barclays eyeballing a 12.2 percent year-over-year decrease, to $99.2 billion. National ad spend is expected to fall 8.4 percent to $152.9 billion.

At particular risk is print, with magazine ad revenue expected to backslide by 15 percent to $10.8 billion and newspapers looking at a 17 percent dropoff ($28.7 billion). TV station revenue could drop as much as 15.5 percent in 2009, with local and national spot expected to add up to $20.7 billion.

Broadcast is also due for a reversal, as Barclays now believes the big four network TV outlets will fall 10 percent to $14.5 billion, versus its previous projection of negative 8 percent. And while the firm only two months ago saw cable increasing its take by 1.8 percent, Barclays now sees national cable dropping 2.9 percent in ‘09, to $20.2 billion.

Only the Internet seems to stand a chance to grow next year, as Barclays predicts a 6.1 percent spurt in the sector, with ad dollars hitting the $25.1 billion mark. Search could grow by as much as 20 percent, while display will show more moderate development, increasing by 4 percent.

The Barclays forecast is only the latest in a long succession of new outlooks, as analysts now believe that stunted consumer confidence and an economic recession will cause ad spend to contract for the first time since 2001. Zenith recently said that ad spending will slip 6.2 percent in 2009, with total TV set to drop 6.7 percent. Meanwhile, Magna has said that it anticipates a 4.5 percent decline in ad spend.

While next year looks to be as bleak as any in recent memory, Barclays did hold out hope for a rebound in 2010, forecasting 1 percent year-to-year growth. Cable and online are expected to lead the resurgence, with projected growth of 5 percent and 12 percent, respectively.