Ad Market Recovery in 2010?

Perhaps we all are anticipating too much "normalcy" from the current recession and recovery. But PricewaterhouseCoopers (PwC) expects a 2010 recovery.

PwC says worldwide advertising spending will reach $421 billion 2009.

The bad news is that figure is down 12.1% from 2008, which saw $479 billion in spending.

Fortunately, PwC expects the online and mobile (which it treats as one category) and video game ad spaces to rebound in 2010 with five-year compound annual growth rates of 7.7% and 13.8%, respectively.

PwC expects all global media markets to see a rise in spending by 2012. Recovery will not be evenly spread around the world, however. Total ad spending in North America compounded annually will decrease by 1.6% from 2009 to 2013.

Online, mobile and video game advertising will see 6.4% and 13% compound annual growth rates, respectively, over the five-year period.

Online and mobile advertising spending, down in 2009, will rebound in 2010. North America will see overall advertising spending rise in 2011.

Ninety-four percent of North American advertising spending will come from the United States.

No Inflection Point for Interactive Media, Yet

Nothing is going to replace search advertising as the top interactive category, just as nothing appears able to dislodge display advertising, between now and 2014 or so.

And though interactive advertising is growing, it will not displace offline alternatives, either.

By 2014, all interactive channels together will account for about 21 percent of total ad spend.

That is not to say greater changes are unlikely. One of the enduring lessons of "disruptive" change is that there is a sometimes long gestation period before an inflection point is hit. Then the change goes non-linear and vast changes can occur very quickly.

Nobody knows yet if that is what lies ahead for advertising. But it bears watching, as 2009 seems to have marked something of a watershed for print media, for example.

U.S. Internet Growth 3% to 2013

The total number of people online will grow by over 45 percent to 2.2 billion users — with much of that growth occurring in Asia — over the next five years, according to Forrester Research.

Asia remains the biggest global Internet growth engine: 43 percent of the world's online population will reside in Asia by 2013, with 17 percent of the global online population in China.

Growth rates in the US, Western Europe, and the major industrialized nations in Asia Pacific such as Australia, Japan, and South Korea will slow to between one percent and three percent.

That is a significant finding, as it suggests most people who want to use the Internet already do so.

Online penetration in the United States will rise from 73 percent to 82 percent over the next five years, representing about a three percent annual growth rate.

By 2013, U.S. online penetration will be on par with the most highly penetrated markets of Europe and Asia, such as the Netherlands, the UK, Japan, and South Korea.

By about 2013, if not before, there also will not be any material difference between people using the Internet and people using broadband, other analysts project. That should lead policymakers to take a harder look at the costs and benefits of any programs designed to "increase" use of broadband access.

The United States is about at the point where non-use of broadband is directly linked to non-use of broadband.

http://www.forrester.com/ER/Press/Release/0,1769,1296,00.html

Mobile Marketing Second Only to Web Among Top Ad Agency Execs

Though mobile marketing spending lags far behind combined Web advertising, mobile marketing has become quite interesting to many advertising excutives recently.

Where a third of executives say Web channels are most popular, mobile campaigns are second, at 15 percent.

That is interesting as mobile campaign spending is perhaps one percent the size of search advertising, for example.

Traditional methods, including TV, print and direct mail, are in single digits.

To the extent that spending ultimately follows interest, mobile campaigns should skyrocket, despite the currently limited amount of spending in the category.

Search Still Will Lead 2014 Interactive Marketing Channels

Search will remain the single largest interactive marketing channel in 2014, and online display will keep its second-place status among marketers.

But social media marketing will show the highest growth rate, passing email marketing.

Mobile marketing also will grow by an order of magnitude.

What Are New Satellite Phone Operators Up To?

New satellite communications operators TerreStar Networks and SkyTerra Communications plan to offer dual-mode (satellite and cellular) services in North America to dual-mode smart phones aimed at a niche market of public safety, law enforcement and government users.

Based on past experience, one might wonder whether that market opportunity is big enough to support much of a business for both providers.

ABI Research, for example, suggests three million satellite-capable LTE smartphones will be shipped in North America in 2012. But there might be something more going on here.

The Federal Communications Commission allows satellite operators to offer simultaneous satellite and cellular services over their licensed satellite spectrum. That suggests a possible play as a fourth-generation access play in rural markets where it is very expensive to supply such capability.

“We believe that the greenfield satellite companies’ plan is to forge short-term roaming partnerships with AT&T and other cellular operators and then, when LTE services are deployed, position themselves to be acquired by these major players, including their prized spectrum," says ABI Research practice director Kevin Burden.

Danger for Service Providers If Confidence Doesn't Climb

Led by a dramatic decline in the expectations of U.S. consumers for the near future of the U.S. economy, the most recent results of the Royal Bank of Canada Consumer Attitudes and Spending by Household Index show a marked downward shift for July 2009, continuing the slide begun last month.

"Consumer confidence is resetting to the levels seen earlier this year and is likely to remain there until there is concrete evidence of a turnaround, "says RBC Capital Markets Managing Director Larry Miller.

Should those trends continue, service providers will have to worry anew that relative stability in communications and entertainment servcies markets will take a hit more pronounced than what they have seen to date.

So far, there seems to be minor damage to broadband access revenues and a growing trend to substitute prepaid for postpaid mobility. Some surveys suggest only a few percent of broadband subscribers say they actually have cut off service. A recent Strategy Analytics survey suggests 10 percent would consider reducing broadband if they had to cut somewhere.

As many as 19 percent say they would consider abandoning mobile service, though there is little if any evidence users actually have done so, at that level. Most other surveys show little if any actual termination behavior.

About 19 percent of respondents to the Strategy Analytics poll say they would consider dropping their multi-channel entertainment service, but again, actual behavior does not support moves of that scale.

Still, a prolonged "scrape along the bottom would increase pressure on consumers to move more aggressively. And the RBC survey suggests that might just be the case.

After four consecutive months of rising hopes that the economy would turn around in the next six months, the longest such increase in expectations since the launch of the index in 2002, many Americans are coming to grips with the idea that it may still be some time before things get better, Miller says.