PwC predicts broadcast ad growth in the black – albeit slower

Advertising is set to be the fastest growing segment of the Internet's economic equation over the next four years with no region experiencing growth at a faster rate than Canada according to the latest edition of PricewaterhouseCoopers' (PwC) Global Entertainment and Media Outlook: 2007-2011. But will that increase come at the expense of advertising on traditional broadcast media?The answer is yes, and no. PwC projects that while the growth rate of certain sectors of the broadcast advertising market will slow significantly over the next four years, none will actually experience a declining growth rate. In fact, some sectors will actually continue to pick up momentum. "TV networks is still the biggest segment that we have in Canada by far," says Tracy Jennings, Canada's new leader of PwC's entertainment and media practice. "There are many consumers on conventional TV where the consumers are, that's where the ad dollars will be. So you're just seeing a slowdown in the growth on the broadcast side." Specifically, PwC projects that total television advertising will rise from US$2.4 billion in 2006 to US$3 billion in 2011, a 4% compound annual growth rate (CAGR). However, the final year of its projection (2010-2011) PwC predicts 4.5% growth, which is above the five-year average and a significant improvement over the 2004-2005 growth rate of 1.9%. Even more promising news for broadcasters is that specialty channel advertising will be the fastest growing sector in the television network market, tracking a projected 7.6% CAGR to US$1.1 billion in 2011 from US$749 million in 2006. But as advertisers spending shifts to the more focused segments of specialty channels and the Internet, conventional national broadcast advertising will only grow from US$1.7 billion to US$1.9 billion, a 2.3% CAGR, between 2006 and 2011. On the radio side, PwC projects the total Canadian market will expand to US$2.3 billion by 2011, up from US$1.3 billion in 2006, a 12.4% CAGR. This projected revenue increase seems to fly in the face of a recent Statistics Canada report that Canadian radio listening has dropped by nearly two hours on average per week since 1999. But according to Jennings, there's no reason to believe advertisers will shy away from the medium. "Radio is still very attractive to advertisers and that's mainly because it offers excellent value because of its continuing high local penetration," she says. "We're still projecting very strong because the more you can focus into a particular local segment or geography the higher the value of advertising is to the advertiser." Not to be outdone by its traditional counterparts, the Internet is projected to experience astounding increases in advertising spending, especially in Canada; our projected increase from US$706 million in 2006 to US$2 billion in 2011 represents the fastest CAGR (23.5%) in that category for any region in the world. "Canada has one of the highest broadband penetration rates so we have been a little bit ahead of the curve in terms of other countries," says Jennings. "More consumers are online and that's really why you're seeing now a significant shift in Internet advertising and Internet advertisers." Although constant, dramatic increases in spending on Internet advertising could eventually halt the growth in spending on television advertising, PwC doesn't necessarily look at the two as competing markets. Instead it groups together the television, home computer and wireless handset markets in what it calls the convergent platforms. Global spending related to the distribution of entertainment and media across the three platforms combined is expected to overtake spending on all other entertainment and media segments tracked by PwC - recorded music, radio and out of home, video games, magazine, book and newspaper publishing, theme and amusement parks, casinos and regulated gaming, and sports - by 2008.

PwC predicts broadcast ad growth in the black – albeit slower

Broadcast | July 9, 2007

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us