US Online Advertising Spending to Surpass Print in 2012

Are those green shoots of an economic spring beginning to pop up early this year?

Overall advertising spending is expected to increase this year, but for the first time in history, online ad spending will surpass spending on print. Online ad budgets also appear set to overtake TV in the next few years, even though TV ad spending is continuing to grow.

The seemingly inexorable rise of online ad spending is now a bow to reality rather than a breathless anticipatory bet on the future. Given the increasing amounts of time that consumers are spending online, advertisers are simply following their customers. The questions that now have to be answered concern effectiveness, efficiency, productivity and return on that investment. Experience is teaching that consumers behave differently online. Their decision-making processes reflect both the immediacy of the appeal and the convenience of the service. Expectations may be exceeding merchants' ability to produce.

And the nature of what 'online' means continues to evolve as mobile becomes more prevalent. What to measure - and how to do so - are now supplanting the demands that online prove its worth. JL

Clark Frederickson reports at eMarketer Digital Intelligence:

US online advertising spending, which grew 23% to $32.03 billion in 2011, is expected to grow an additional 23.3% to $39.5 billion this year—pushing it ahead of total spending on print newspapers and magazines, according to new forecast by eMarketer.

Print advertising spending is expected to fall to $33.8 billion in 2012 from $36 billion in 2011.
The growing amount of time consumers spend with digital platforms and advertisers’ view of the internet as a more measurable medium—especially as the soft economy forces businesses to be more accountable with their ad dollars—are both significant contributors to digital’s growing footprint, Hallerman added.

eMarketer forms its forecast for advertising spending though a meta-analysis of reported revenues from major ad-selling companies; results from benchmark sources such as the Interactive Advertising Bureau/PricewaterhouseCoopers, Newspaper Association of America, Radio Advertising Bureau and Outdoor Advertising Association of America; and research estimates and methodologies from dozens of firms that track ad spending. eMarketer’s estimates for US total media advertising include directories, internet, magazines, mobile, newspapers, outdoor, radio and TV. The forecast does not include spending on direct mail.

Despite concerns about the economy among agencies and marketers, total ad spending in the US is expected to continue to rebound in 2012 after rising 3.4% to $158.9 billion in 2011, according to eMarketer. US total media ad spending will grow an estimated 6.7% to $169.48 in 2012, boosted by the national elections and summer Olympics in London, eMarketer estimates.

While several notable firms downgraded their 2011 estimates for US ad spending growth during the latter portion of the year, eMarketer’s estimates for total media ad spending growth remain slightly more confident—a result of the rapid rise of digital advertising and brands’ continued confidence in television advertising, despite increasingly fragmented viewership and the soft economy. Spending on TV advertising grew 2.8% in 2011 to $60.7 billion, eMarketer estimates. This year, TV ad spending will grow an estimated 6.8% to $64.8 billion.

In the newspaper industry, digital revenues remain a sole bright spot. eMarketer estimates US digital ad revenues for newspapers will grow 11.4% to $3.7 billion, after rising 8.3% to $3.3 billion in 2011. Print advertising revenues at newspapers, however, will dip an additional 6% to $19.4 billion in 2012, eMarketer estimates, after falling 9.3% to $20.7 billion in 2011.

At magazines, US print ad revenues are expected to rise 0.5% to $15.34 billion in 2012, up from $15.3 billion last year, eMarketer estimates. US digital advertising spending at magazines is expected to grow 19.3% to $3.3 billion this year, after growing 18.8% to $2.7 billion in 2011.

Radio advertising spending will grow 3.6% to $16.7 billion in 2012, after growing 1.3% to $16.1 billion in 2011, eMarketer estimates, while spending on outdoor advertisements will grow 6.3% to $6.8 billion. Directories ad spending will decline 8.5% to $7.5 billion this year, eMarketer estimates.