INSIGHTanalysis: Media Healthcheck – June 2006

The study showed that, after adjusting for inflation, the rise means a 0.6% increase in real terms, representing the fourth consecutive year of positive growth since the advertising recession of 2001. It pointed out that national newspapers, regional newspapers and business magazines all suffered from decreased levels of advertising spend following strong growth in 2004 (see Advertising Expenditure Almost £19 Billion In 2005).

Looking to 2006, Carat has lowered its forecast for UK adspend growth from December’s figure of 4.5% to 3.2% for the year. It said that the forecast had been revised because the expected boost from the World Cup had not materialised (see UK Advertising Growth Hit By World Cup). Carat said that online advertising will overtake magazines in the UK this year and is expected to overtake newspapers by 2008 in the US.

ITV in particular have not done as well from the World Cup as was previously predicted, with media buyers saying that its ad revenues could fall by as much as 23% for June. The buyers said that many advertisers were deliberately avoiding the World Cup months while the whole of the advertising market was slow (see ITV Ad Revenue To Tumble). However, ITV said that it is engaged in diversifying its revenue streams, with fast growth from ITV2, 3 and 4. While ITV1 represented about 90% of the company’s total advertising revenues last year, the broadcaster has predicted that by 2012 50% of its ad revenue will come from outside the channel (see Pro-Active Audiences To Affect Advertising Models).

Although the World Cup has been blamed for lower than expected adspend, it has been seen as a big boost in other areas, with Informa Telecoms & Media predicting that the tournament will kick start the growth of mobile TV in Europe. It forecast that £300 million of revenue will come from users accessing streaming and broadcast services on their phones during the competition, and went on to say that by 2011 mobile TV will have 210 million subscribers, with 10% of all handsets sold in that year having a broadcast receiver (see World Cup To Kick Off Growth For Mobile TV).

A more conservative prediction was made by In-Stat, who forecast that broadcast subscribers worldwide will reach 102 million by the end of 2010, a giant leap from 3.4 million in 2006. The high-tech market research firm said that the greatest challenge facing mobile TV broadcast operators is the acquisition of the spectrum necessary to offer services (see Mobile Phone Advertising To Increase).

On a global scale, PricewaterhouseCoopers’ Global Entertainment and Media Outlook: 2006-2010 said that the entertainment and media industry has entered a solid growth phase and forecast to increase at a 6.6% compound annual growth rate to $1.8 trillion in 2010. The report also said that in the US the growth of high definition television and digital video recorders will lead to an increase in TV viewership and advertising, while in Europe the online game market will grow due to increased broadband penetration and new consoles focused on online play (see Solid Growth Forecast For Media Industry).

DFC Intelligence also released a report in June, which said that it expects the online game market to grow from $3.4 billion in 2005 to $13 billion in 2011, although it was noted that the fragmentation of the gaming market means that even though a game may do well in one region, this does not automatically mean it will do as well in another (see Online Games Could Hit $13 Billion By 2011). The report said that a large part of this growth would be fuelled by Massively Multiplayer Online games. This fits in well with forecasts from Parks Associates, who released a study predicting that US in-game advertising in PC games will increase from $80 million in 2005 to more than $400 million in 2009 (see In-Game Advertising To Increase To More Than $400 Million In 2009).

Staying with online, internet adspend in the US (not including search) will increase by 13% in 2006, according to predictions made by TNS Media Intelligence. The figure, from a revised full year forecast, adjusts an earlier figure of 9.1% growth in 2006 (see US Internet Adspend Predicted To Increase By 13%).

A large reason for the growth in online activity is the increasingly large take-up of broadband, and towards the end of the month Point Topic released its World Broadband Statistics for Q1 2006. This showed that broadband is continuing to grow globally, with the UK and France both having 10.8 million subscribers, while the Asia-Pacific region still claims the largest share of all broadband lines, accounting for 40% of the world’s 229m lines in Q1 2006 (see Asia-Pacific Still Ahead In Broadband Boom).