Ad revenues set to increase in 2010

Magna has revised its media advertising revenues forecast for 2010 from a ’1% decline’ to ’3% growth’. However, this year will be as good as it gets until 2015, it cautions.

Money

The new prediction comes on the back of improving consumer confidence and “better than expected” results in the fourth quarter of 2009 for UK media owners.

The revision means a return to growth after two years of decline with the possibility of the media economy reaching the 2004 level of £11.3bn this year. In 2009, revenues were £11bn.

Major broadcasters’ advertising revenues have also “significantly outperformed” market expectations sparking a u-turn in forecasts for TV advertising revenues from 4.3% decline to 3.5% growth. This comes in spite of concerns that the Contract Rights Renewal burden would depress pricing at ITV.

Online will continue to be the UK’s dominant advertising medium, with Magna predicting further growth in 2010. Forecast for search and display have been increased slightly to 12% and 5.7% respectively. This will be driven by the vibrant e-commerce sector, the appeal of online to small and medium-sized businesses and increasing online activity from traditional media-focussed marketers.

Outdoor and radio are benefitting from “pent up demand” from advertisers after record declines last year, though Magna suggests caution will prevail later in the year on the back of renewed concerns over the economy.

Long-term, the picture is also one of caution, reports Magna. Persistently high unemployment and doubts over the sustainability of the recovery means estimates for 2011-2015 have been reduced. In total, the expectation is for media advertising revenues to grow 2.5% to £12.8bn by 2015, compared to the previous estimate of 4.5%.

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