U.S. Ad Market Forecast to Grow 3%

A new forecast from media and marketing research firm SNL Kagan predicts the U.S. ad market will rebound with nearly 3 percent growth this year to $210 billion after two years of declines.

The firm is forecasting growth in the sector for the foreseeable future, predicting ad spend of $214.3 billion in 2011 and reaching $275.8 billion by 2019.

The firm’s near-term forecast is in-line with other recent predictions. In July, Publicis Groupe’s Zenith Optimedia upped its 2010 North America forecast by almost 3 percentage points, saying the region would post growth of 1.3 percent for the year to $159 billion. Previously, it said the region would contract by 1.5 percent.

Also in July, Interpublic Group’s Magna Global revised its U.S. media forecast upward, predicting that media companies would generate almost $170 billion in advertising revenue this year, up 2.1 percent versus its earlier forecast of 1.6 percent year-over-year improvement. (Those figures exclude political and Olympic ad spending.)

The rosy ad spend outlooks come despite a still uncertain economy and amid indications that consumer spending continues to lag. “By all measures consumer spending remains kind of soft, with lingering concerns about unemployment and the possibility of economic growth easing,” Jon Swallen, svp, research at WPP Group’s Kantar Media, recently told Adweek. “And the prospects for an increase in consumer spending are not real good.”

The SNL Kagan research predicts that the sectors with the strongest growth this year will be mobile, broadcast TV stations and the Internet, while business publications and newspapers will show the largest declines.

Newspapers will continue to struggle to retain advertising share, SNL Kagan said, noting that dailies have seen their revenues cut in half, dropping from $46.3 billion in 1999 to a forecasted $23 billion in 2011. Looking further ahead, declines are expected to level off, the firm said, with projected revenue of $22.5 billion in 2019.

Meanwhile, Internet ad revenue will continue to climb sharply, per the SNL Kagan forecast. Ad spend in the sector has grown from $4.7 billion in 1999 to an estimated $27.8 billion in 2011 and is expected to more than double by 2019, reaching $60 billion.

Cable TV is projected to remain strong. SNL Kagan forecasts the medium will grow to $30.2 billion in 2011 and $55.1 billion in 2019, up from $12 billion in 1999.

“New media, such as mobile and Internet advertising, continue to boom, while old media, particularly print, is increasingly losing its relevance,” said SNL Kagan senior analyst Derek Baine. “Dollars are shifting into new platforms and those drawing the most eyeballs, such as cable TV.”

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