U.S. Ad Spending Growing at Best Pace in Six Years

By: Jeanine Poggi

Magna expects 2016 to see the largest increase in United States ad spending in six years. The IPG Mediabrands' agency revised its forecast for the year on Wednesday, predicting ad revenue in the U.S. will grow to $179 billion, a 6.3% increase. In June, Magna had predicted a 6.2% jump in ad revenue.

A 6.3% jump would represent the strongest growth rate since 2010, when revenue increased 6.6%.

Excluding incremental ad sales generated by the 2016 presidential election and the Summer Olympics, ad growth would be 4.4%, in line with last year's growth of 4.3%.

The revised forecast comes following a stronger-than-expected first-half of the year, with ad revenue climbing nearly 7%. The first quarter actually saw the strongest year-over-year growth rate recorded in over a decade. Ad sales were driven by a 4.6% jump in national TV, 18.3% surge in digital media and 3.8% growth in out-of-home. Print and radio advertising continued to decline 9% and 2%, respectively.

While some advertisers such as Procter & Gamble have publicly said that their digital media investments have proved disappointing and they are re-allocating dollars back to TV, Magna said overall advertisers did not reduce their digital advertising in the first half of the year. Instead they increased spending on both digital and national TV advertising at the expense of print and radio.

Overall ad growth is expected to slow in 2017 due to a lack of tentpole events, with Magna expecting a much more modest 1.4% increase for the year. Still, Magna predicted that underlying demand will remain strong.

For the first time ever, digital advertising this year will equal TV ad sales, with both generating about $68 billion, according to Magna. Growing at 44%, social media advertising is the biggest contributing factor in digital advertising equaling TV ad sales. By the end of the decade, digital ad sales is expected to reach $105 billion.

Author: Jeanine Poggi

Source: adage.com URL: https://goo.gl/5ip50P