Media Outlook 2011: Spot TV

Spot TV will be coming off quite the two-year roller-coaster ride in 2011.

From hitting rock bottom in 2009 to double-digit gains in 2010, any growth in 2011 will be tempered by tough comparisons. In odd years, sans political, Olympics, World Cup and other special events, forecasters traditionally predict negative growth. It’s no surprise that forecasts for 2011 follow suit.

Forecasts from SNL Kagan, Veronis Suhler Stevenson, BIA/Kelsey and Magna Global predict declines in the low-to-mid single digits, ranging from SNL Kagan’s moderate 2.5 percent decline to a 5.5 percent decline from BIA/Kelsey, which also forecasts digital will be up 20 percent to $798 million. Wells Fargo is the most pessimistic, predicting an 8 percent drop. Only PricewaterhouseCoopers is forecasting a small uptick of 1.7 percent.

While the forecasts differ by a few percentage points, all agree that the segment will not hit the advertising revenue levels achieved in 2006 until some time after 2014. At the same time, prognosticators also agree that conditions won’t be as bad as 2009 and 2008.

The business has definitely made up some lost ground. “TV is on track to regain half of what was lost over the last two year,” says Marci Ryvicker, director of equity of research for Wells Fargo, who notes that broadcast TV gained share from newspapers during the recession.

Even though most forecasts predict spot TV will be down, there is a chance the market could surprise. Much depends on the economy and the hard-to-predict consumer. Beth Ann Bovino, senior economist for Standard & Poor’s characterizes the recovery as “slow and uneven.”

A number of factors will determine whether 2011 will be up or down. Will broadcasters be able to make up the dollars sweeping into their coffers in 2010? Will auto, which came back with a vengeance in 2010, keep up the momentum? What about retail and telecom, and other categories that have held up the medium’s core in 2010? Finally, what will happen with network TV scatter?

Most agree that a lot of big national spot advertisers will be back next year. “I can’t tell you a key spender that is not returning,” says Leo MacCourtney, president of Eagle Television, a division of Katz Media. “There are not only returning spenders that increased budgets, but a lot of advertisers that dropped out in 2009 as a result of the weak economy are returning.”

“Big advertisers will be back, but they remain cautious,” says Kevin Gallagher, evp and local activation director for Starcom. “The good thing about spot is that we can do things at the last minute and that we’ll continue that.” The debate is whether or not advertisers will spend enough to make up the unprecedented political dollars spent in 2010 to deliver growth in 2011.

It may not, but Steve Lanzano, president of the TVB, says that the core business, without political, will be up 3 to 5 percent.

The auto category, which contributes 25 percent or more top spot TV, will be critical to the medium’s performance next year. Auto was tracking up more than 50 percent in 2010. “Auto was 2009’s anchor; in 2010, it was the engine,” says Jon Swallen, svp of research for Kantar Media.

“There are enough new model introductions scheduled for this fall and early next year and that should ensure a steady flow of auto dollars into first quarter. But for continued investment, there will need to be a sustained pick up in vehicle sales,” Swallen adds.

Estimates from Ward’s Dealer Business put new car sales at 13.1 million for 2011, up from 11.3 in 2010. That bodes well for spot TV.