MAGNA released its US Media Advertising Revenue Forecast today, and reports that although the economy continues to face challenges, expectations for the future have improved significantly during the past two quarters.
“Among major economic measures, Industrial Production (IP) and Personal Consumption Expenditures (PCE) have the highest correlations with advertising, and forecasts of these variables inform our predictions of advertising revenue growth and decline,” says MAGNA. “While consensus forecasts for PCE have not changed meaningfully, expectations for IP have improved. As a result, we are moderating our 2010 advertising forecast and now expect normalized advertising revenues (excluding local TV political and national TV Olympic revenues) to decline 1.3% next year.”
The firm previously published expectations for a decline of 2.1% in 2010. In total, they expect suppliers to generate $159 billion of normalized advertising revenue next year.
For the fourth quarter of this year, MAGNA forecasts that U.S. media suppliers will collectively generate 9% less ad revenue than the year before. They also expect industry revenues to fall from $47.5 billion in the fourth quarter of 2008 to $43.2 billion.
“These figures reflect a moderating pace of decline compared to estimated revenue reductions of 13% during the third quarter and 18% declines during each of the first two quarters of this year,” says MAGNA. “As we previously forecast, the first half of 2009 marked the bottom of the ad-supported media economy’s decline.”
Year-over-year changes in PCE fell for three consecutive quarters between October 2008 and June 2009.No period since quarterly records were first published back in 1947 has recorded any decline in PCE before the current downturn, according to MAGNA. In addition, IP fell at a quicker pace than any time since 1975 in the last several quarters.
