by: Tom Yadron

As we reach the halfway point of the first quarter of 2012, advertisers have begun releasing their ad spending projections for the New Year. Despite the positive outlook of the economy and predicted increases in ad spending, many agencies are playing it safe in their spending projections for the to the second quarter. 

The 2010 Citizens United Supreme Court decision has spurred record amounts of political advertising this year.

With the presidential election, the Olympics and an increase in digital ad spending, media forecasters have reason to believe this year should shape out to be positive.

While election years have always provided a good boost for advertising, this year has been exceptionally rewarding (especially if you’re CBS). With the Supreme Court’s 2010 Citizens United decision – which allows independent corporations and unions to spend unlimited amounts of money on communications in support of their candidate – networks have seen record amounts of political advertising. CBS, for one, will rake in around $230 million dollars in political advertising this year.

The Olympics have also inspired increased spending by advertisers. P&G, for example, plans to spend more money on advertising this summer than it
during the 2010 Olympic games, in 
the hopes of “[adding] $500 million in incremental revenues.” According to media forecasting group Magna Global, increased ad spending due to the Olympics and the US presidential election are saving 2012 from being “a flattish year.” The 2012 Olympics in London will be a good boost for the ad industry overall.

While some companies like General Motors are cutting spending (recently it “cancelled up to half of the second-quarter TV time it had previously committed to use”) others, like Procter & Gamble and Unilever, plan to find ways to save money by turning to digital.

Some brands, still, have plans to increase their ad spending in areas not limited to digital. PepsiCo, for example, has recently announced an additional $500 to $600 million to advertise its brands this year.

Though the year started off slow, networks have seen a gradual increase in scatter market activity (advertising that is sold close to a program’s air date) as of late. And after a rougher-than-expected end to 2011, we can expect to see digital marketing pick up as we move deeper into the year. According to Mel Berning, exec VP-ad Sales at A&E, the biggest indicator of ad expenditures for the year will come in the second quarter when upfront spending begins. This is the period during the spring when advertisers buy premium space on network television for the upcoming fall seasons.

Overall, TV ad revenue will jump 6.8% and Internet advertising will increase 10.9%, according to Magna Global.

What does this mean for advertising students?

Although times have been rough on the industry as of late, things are slowly starting to look up. Looking to save money, a lot of companies are turning to digital, so being well versed in that area is key to your future in this industry.

Sources:

[1]http://adage.com/article/mediaworks/record-political-advertising-swing-state-cash-spreads/232667/ [2]http://adage.com/article/mediaworks/quarter-marketers-wary-amid-temperate-ad-growth/232541/               [3]http://adage.com/article/news/cost-cuts-store-p-g-unilever/232539/ [4]http://www.magnaglobal.com/ [5]http://www.supremecourt.gov/opinions/09pdf/08-205.pdf [6]http://upload.wikimedia.org/wikipedia/en/thumb/1/10/London_Olympics_2012_logo.svg/200px-London_Olympics_2012_logo.svg.png [7]http://i.usatoday.net/news/_photos/2011/12/11/Gingrich-Romney-take-jabs-at-GOP-debate-1NMQ94T-x-large.jpg [8]http://adage.com/article/news/p-g-lofty-goals-2012-global-multibrand-olympics-push/232104/

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Written by Ad Buzz

The American Advertising Federation Illinois Chapter brings to you Ad Buzz, a blog dedicated to all things advertising related, from our favorite campaigns to trends going on in the industry.

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