Cable, Internet Drive Ad Comeback

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After two years of
declines, the U.S. advertising
market is showing signs of life,
with research house SNL Kagan
predicting that big gains in the
cable TV and Internet sectors
should keep the industry in the
black for the rest of the decade.

According to a research note
issued last week — “Advertising
Forecasts: U.S. Market Trends
and Data for All Major Media” —
Kagan estimates the overall advertising
market will rise about
2.8% in 2010, after declining 5.5%
in 2008 and 15.6% in 2009.

Driving that growth will be big
gains in cable TV — Kagan predicts
that cable-TV ad revenue
will rise 8.9% in 2010 and 82.5%
between 2011 and 2019 — and
the Internet. SNL Kagan said that
Internet ad revenue will rise
10.4% in 2010 and more than double
to $60.1 billion by 2019.

One surprise is Kagan’s stance
that broadcast-TV networks will
fare worse than television stations
in the coming decade.
According to Kagan, Broadcastnetwork
ad revenue will increase
5.1% to $19.1 billion in 2010, but
will fall 1% to $18.9 billion in 2011
and dip another 3.7% to $18.2 billion
by the end of 2019.

In the study, SNL Kagan Senior
Analyst Derek Baine noted
that as viewership has shifted
from broadcast networks to cable
and the Internet, so will ad
dollars.

“We estimate that going forward,
more advertisers will look
to alternative outlets for their
ad dollars and that broadcast
will have slowing growth,” Baine
wrote.

He added that the growth in
TV-station ad revenue and the
decline for the networks during
the decade will be more likely
due to declining CPMs at the
broadcast networks, as audiences
decline and advertisers
find cable networks to be a better
buy.

In contrast, broadcast television
stations, which were hammered
in 2008 and 2009 by the
virtual disappearance of the local
ad market, are expected to
show strong gains, although
they won’t yet return to the levels
achieved earlier in the century.
According to Kagan,
broadcast television station ad
revenue will rise 15% in 2010 to
$18.8 billion from $16.3 billion
in 2009, and gain another 15.5%
between 2011 and 2019 to $20.9
billion.

While that is still far off from
their peak in 2006, when broadcast
TV-station ad sales topped
$24 billion, it also doesn’t include
one of the sector’s fastest-growing
revenue segments, retransmission
consent. In a separate
study released earlier this year, SNL Kagan predicted retransmission
consent revenue would
top $1.2 billion by 2012.

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