Media has had pneumonia, now get ready for a year of flu warns analyst

Media analyst Steve Allen has forecast a tough 2013 advertising market, and despite an overall prediction of 3.4% growth says the market “may not have pneumonia, but it still has severe flu”.

The head of Fusion Strategy has published his predictions in a report titled “Oh dear, things just won’t get better. And most likely, not for a long time.”

He predicted that the relatively downbeat outlook would remain for two to three years – with newspapers suffering the most as circulation dwindles.

 

 

The 2013 Fusion Strategy outlook table for ad spend predicts for 2013:

  • Newspapers: down 4% to $2.45bn
  • TV: up 2.5% $3.89bn
  • Radio: up 2% to $1bn
  • Magazines: up 3% to $975m
  • Outdoor: up 3% t0 $520m
  • Cinema: up 12.2% to $110m
  • Pay TV: up 4.6% to $455m
  • Internet: up 10.1% to $3.7bn

The overall average is 3.4% growth to $13.2bn.

“But this is coming off a low base and follows two years of dastardly figures,” Allen said.

Allen said the large internet figure included search engine revenue, and while Google never releases figures, the Internet Advertising Bureau had published an estimate which was used to compile the Fusion Strategy’s figures.

The other seemingly aggresive growth prediction was cinema although growth predictions coem with a note of caution after Val Morgan CEO Damian Keogh last month reportedly  admitting the methodology used by the industry had inflated the figures.

“Unfortunately until a new calculation system is worked out and there is more clarity, we can only go with the figures we’ve got,” Allen admitted.

He said various international factors were affecting the Australian economy and retail mood, but also said Coles and Woolworths played a big part in the drop in media spending.

“Over the past 30 years there has been an average 6% growth in retail spending every year, but last year it only tracked at 3.65%,” he said.

“Coles and Woolies have been embarking on price cutting campaigns, and that in turn puts pressures on manufacturers to cut costs and one of the first places they cut is marketing.”

Comments


  1. Lenny Manor
    17 Jan 13
    10:22 am

  2. Thanks for the stats,

    Some very interesting predictions and overall it looks like a promising year for media sales. However the elephant in the room is still newspaper and magazine ad sales which as anticipated will continue to decline.
    We’ve begun taking some action towards assisting the sales of newspaper ads as well as magazine ads by creating an advertising marketplace where these mediums can gain new business and increase revenue.
    I welcome anyone in the newspaper or magazine ad sales industry to visit http://www.findmedia.com.au to start attracting new business.

    If you have any questions at all please feel free to contact me on 0452 179 874 or via email to lenny@findmedia.com.au

  3. David Smith
    17 Jan 13
    1:53 pm

  4. Hang on Lenny … Steve says magazines will go up, not down.

  5. Lenny Manor
    17 Jan 13
    2:02 pm

  6. Thanks for that David,

    Your right newspapers are the main issue however with the rise of magazines going digital the ad sales have been able to pick up (online) http://www.publishersaustralia.....e-research
    This is due to new audiences being introduced in the digital magazine sphere however still print advertising in general is lacking the force it once had, and this is what we are aiming to assist.

    Thanks for your comment David.

  7. Nat
    17 Jan 13
    3:34 pm

  8. Steve is becoming a teensy overexposed. There’s nothing interesting in this scenario. The really interesting questions are about inventory and profits. At some point soon newspapers and their tagalong web sites will have to rationalise inventory (yield versus costs) as they run very close to the wire on sustainable cash flow. Recent cost cutting does not look like that (just have a look at what’s been cut so far).
    At that point things will become really tricky because the network pricing web models are poison to rate card yields.
    I am wondering whether 2013 is the year of the end game for a few players (both product and people). It certainly looks like something Charles Darwin would be interested in. (Steve might like to have an eye out for the detailed accounts from the news ltd breakout and the December half Fairfax and APN numbers. Now they will be interesting. )

  9. Will
    17 Jan 13
    9:15 pm

  10. Its all going to slow down at some stage isn’t it? I mean it can’t keep increasing forever.

  11. Not a chance
    18 Jan 13
    9:26 am

  12. No way – flat at absolute best

  13. erk
    18 Jan 13
    11:01 am

  14. Nat makes a good point. A few big calls are on the line in 2013 and he’s right to focus on the pinch between collapsing revenues and costs. No one is happy in TV, except probably Gyngell who has swapped a lump of lead (debt) to a gorilla (shareholders) on his back. Radio is full of angst. Digital fun is largely at Google. And of course news media are crunched.
    Kim Williams is betting that News’ new structure will allow him to stare down Fairfax, which might not be a tough ask with their chairman in various gun sights and a CEO who seems to be more interested in celebrity lunching. More seriously, Williams has bet on the content play, while Fairfax says its about transactions. Note that Williams has sold or tried to sell two transaction businesses just this week.
    I’m putting my money on Rohan Lund to make something of the Seven Media collage, News to be a winner in the Fairfax breakdown, Telstra to remain inert in media and (if the technology improves) AFL and other content owners to begin to become serious players.

  15. Good point
    18 Jan 13
    12:04 pm

  16. @Lenny, thanks for the spam.

    The uptake of social media ad’s, will surely hit traditional models further. I know where I would place my money: Somewhere I can filter to a certainly region and demographic and see the ROI v wasting $1000′s on scatter gun.

    Let’s face it, media channels are still trying to cope and find their feet. Change is still happening and the dust has certainly not settled yet. I agree that media has the flu for sure. How long will the change continue and what will the long term media landscape look like in say 10 – 15 years?

    The Guardian is about to engage Aussies locally. With the interweb and social platforms the world has shrunk. Will we see more global media brands reach across the world far more than ever before?

    H’mmm, rant over. Lenny good luck with your business, however perhaps make the “plugs” a little less blatant?

  17. Good point
    18 Jan 13
    12:05 pm

  18. certain*

  19. Lana
    24 Jan 13
    9:18 am

  20. With the predicted radio advertising spends for 2013 being up by 2%, this demonstrates the continued confidence advertisers have with radio to produce a solid return on investment.
    Locally, Vintage 87.6 where i currently work, is performing over and above the trends set by the larger commercial radio stations. Revenue for the first half of the 2012-2013 financial year sees advertising spend up by 8.5% on the previous year.
    Local radio like Vintage 87.6 is proving to be a popular choice to target the local marketplace due to their unique formats and local community involvement.
    With businesses continually cutting back their advertising dollars, local radio is becoming the preferred choice as it is the only form of advertising that people can access anywhere…. while driving, walking, exercising, working, cooking, cleaning and even showering and at a very affordable price.

  21. ABC Listener
    25 Jan 13
    11:47 am

  22. @ Lena

    Welcome. Welcome! (deep, loud, booming voice) “mwa, ha ha haaaaa…”

    Do you eat mature Cheddar and drink fine wines at your radio station?

  23. Lana
    30 Jan 13
    9:47 am

  24. @ABC Listener

    Thanks for the overwhelming welcome!!

    You are very welcome to come to one of our morning tea’s in the studio to see for yourself…. No mature cheese or fine wines, but lots of great treats from one of our local restaurants!!

    Will have you converted before you leave!! :)