MAGNA 2009 US MEDIA ADVERTISING REVENUE FORECAST

MEDIA SUPPLIER REVENUE EXPECTED TO BEGIN RECOVERY IN 2010

New York, July 13th, 2009 – MAGNA, a division of IPG’s Mediabrands, today releases its 2009 US Media Advertising Revenue Forecast.  As the U.S. continues to adjust in response to the economic shocks of the past year, advertising-supported media sectors (media suppliers) remain challenged in their revenue-generating capacity, aside from a few significant pockets of dynamic growth.  In media supplier revenue terms, the industry will decline this year because of economic challenges, however MAGNA sees improvement within the next year for many ad-supported media sectors.

A SILVER LINING

Despite these observations, MAGNA remains encouraged about the economy and advertising-supported media for several reasons.  Although Industrial Production and Personal Consumption Expenditures – the variables with the tightest relationship to the advertising economy – have remained weak so far this year, a key factor causing the worsening of the economy last year was the absence of confidence in financial markets.  Further collapse did not occur, and confidence in the stability of the overall economy has gradually returned in recent months.

Media Supplier Revenue Decline has Bottomed Out in First Half of 2009, By Second Half of 2010 Will See a Less Pronounced Decline – Growth Will Return

For 2009 MAGNA forecasts that media suppliers will collectively generate 14% less advertising revenue on a normalized basis (excluding the impact of political advertising and incremental Olympic advertising), as advertising media supplier revenues will fall from $189 billion to $161 billion.  The first half of 2009 will likely turn out to be the worst period of this recession, during which time MAGNA estimates media supplier advertising revenues will have fallen by 18% vs. the same period in 2008.  MAGNA expects further decline through the second half of 2010, although at moderating levels, and expects total market growth to show up in the second half of 2011. 

Continuing economic challenges will contribute to further reductions in media supplier advertising revenues next year, as suppliers face a 2% decline in 2010.  Growth will return gradually, but MAGNA expects that total media supplier advertising revenues will only rise by a compounded annual growth rate (CAGR) of 1% between 2009 and 2014. 

*New Industry Model: This forecast is accompanied by the release of MAGNA’s forecasting model (upon request), in fully-functioning form with variable inputs and a rich data history.