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12.11.2006
Originally featured on BroadcastEngineering.com
Ad industry forecast predicts trouble for old media

At last week’s kickoff of the advertising forecast season in New York City, forecasters predicted a challenging year ahead for traditional media and steady growth for Internet outlets.

Analysts and agencies attending media conferences held by the brokerage firms, Credit Suisse and UBS, predicted growth in ad spending in the United States next year of 2 to 5 percent through 2006. That, according to reports, would represent a decline from the rate of growth in ad spending this year compared with 2005, which is expected to finish in the range of 3 to 6 percent.

The forecasters predicted that in the coming year, traditional media like television and newspapers would at best experience flat growth in ad spending. Those who sell ads on Web sites, however, are likely to experience high double-digit percentage gains.

Television, radio and newspapers will “experience slow growth and ongoing audience declines,” Fitch Ratings concluded in an outlook report, “and ad spending continues to follow consumer patterns.”

Steve King, worldwide chief executive at ZenithOptimedia, predicted that Internet ad spending next year would grow 29 percent from 2006. He expects online ad revenue to grow at “seven times the rate for traditional ad growth.”

Internet ad spending as a percentage of the total for all American media will reach 7.1 percent this year, King said. He predicted that it would hit 10.4 percent in 2009.

David Poltrack, chief resources officer of CBS, said his network would experience a 3 percent growth in network-TV revenue and a strong 2007-2008 upfront market because of a change in measurement focus.

Poltrack, speaking at the UBS conference, said 2007 would be “a transitional year,” and that he had faith in Nielsen’s ability to track commercial minutes actually viewed by the consumer. He expects the “unsettled” marketplace of 2006 to become more defined, as the upfront shifts from program audience to commercial audience as the basis for buying and selling ads.

Poltrack, quoted in an Ad Age report, said he hoped to see revenue grow beyond 2007 as mobile distribution and video-on-demand continue to grow in popularity. He expects broadband-Internet distribution to open up new ad markets while keeping viewers engaged during series’ winter and summer hiatuses.

And, as the 2009 switchover date nears, Poltrack said he expected the viewer conversion rate to HDTV to increase and “enhance TV as an in-home entertainment medium.”



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