AA Predicts 40% Revenue Growth Over 12 Years If New Technology Threat Is Faced
Overall advertising expenditure could grow by more than 40% over the next 12 years, according to the latest predictions of the Advertising Association (AA). However, in its Long Term Advertising Expenditure Forecast, published today, the AA also warns that at least some areas of the media will have to deal with the impact of new technology on revenue sources. “The advertising industry is at a crossroads, facing more fundamental change than at any time in the past fifty years,” said Andrew Brown, director general of the AA.
Brown explained that the 40%+ growth shown in the high option of the prediction would be thanks to excellent prospects of economic growth during the forecast period. “Since advertising revenue usually follows the economy but is more volatile, this would normally suggest a generally prosperous future for the industry,” he said.
Should the low option turn out to be the more accurate, the AA report believes that new technology will be partly responsible. One possibility will be that the internet will bite into the classified advertising market, which provides significant revenue for areas such as quality national newspapers, regional newspapers and business magazines. “This is the assumption of the low option of the forecast, which predicts advertising growth to be 12% over the period, compared to 43% on the high,” continues Brown. “The gap between high and low options of the media most vulnerable to the internet is even greater, since it is quite possible for journals highly dependent on classified to act as portals to the internet and, as a result, perhaps even benefit from new technology.”
New technology may also cause audience fragmentation, the report warns, and this could have an effect on commercial television. “A considerable proportion of TV revenue arises from its success as a mass medium,” says Brown. “If audience fragmentation makes the medium less attractive to some advertisers, losses could ensue. Again, it is vital for television to ensure that it maintains its strengths in this rapidly changing world of new technology.”
While the major media, press and television, will have to brace themselves against the threat of new technology, the minor media, outdoor, cinema and radio, are expected by the forecast to show the highest and most stable growth on both high and low options. In fact, even on the low option, the next three years should be prosperous ones for advertising, if the AA is correct in its predictions.
However, Brown insists that “the function of a long-term forecast is less to predict than to warn” and urged the industry to “recognise the scale of the threats and opportunities likely to arise over the next decade.”
The report covers annual expenditure trends in nine media – TV, national and regional newspapers, consumer and business magazines, directories, outdoor, radio and cinema – and seven product sectors – recruitment, other classified, retail, industrial, financial/services, durables and consumables.
Advertising Association (further information): 020 7828 2771 NTC (to obtain this forecast and other AA publications): 01491 411000
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