ZenithOptimedia has lowered its Canadian ad spend projections for 2012 based on “slower economic growth” than anticipated. According to Bank of Canada estimates, the economy grew a modest 2.4% in 2011, and is expected to grow just 2% this year and 2.8% in 2013.
While low interest rates will continue to fuel domestic demand, the forecast also noted that Canada’s household debt burden now stands at $1.53 for every $1 of after-tax income. Unemployment has also risen slightly, from 7.3% in mid-January 2011 to 7.6% in the corresponding period this year, while both business and consumer confidence have been impacted by the ongoing European debt crisis.
Zenith is predicting Canadian advertising spending to hit $11.3 billion this year, up from $10.8 billion in 2011. It has also made downward revisions to its projections for both 2013 (to 5.2% from 5.6%) and 2014 (to 5.3% from 6%).
TV accounted for approximately 32.4% of the total Canadian ad spend in 2011. After a fall period that saw “slowing demand,” combined with “significant” budget cuts, Zenith predicts the market to recover slowly this year, with a “small bump” for the London Olympics.
TV spending is projected to reach $3.5 billion in 2012, down from $3.51 billion in 2011, with Zenith forecasting a revenue decline for free TV and low single-digit growth for the specialty sector.
The internet accounted for one of every four Canadian ad dollars in 2011 and is expected to account for one in every three as soon as 2014. Canadian advertisers spent $2.66 billion on internet advertising in 2011, and are expected to invest $3.1 billion in 2012.
The forecast said that high demand is driving an escalation in price for premium placements such as homepages, with most mass reach homepages currently sold out months in advance.
After a slight recovery in 2010, the newspaper sector resumed what Zenith characterized as a “softening trend” in 2011, with revenues falling 6.3%. Zenith is projecting newspaper revenues of $1.91 billion for 2012, down from $1.97 billion in 2011.
The forecast notes that advertiser investment in digital formats continues to grow as the medium evolves, noting that digital accounted for approximately 11% of the total daily newspaper ad spend last year. Free dailies such as Metro continue to be the “bright spot” for printed dailies, the forecast stated.
Magazine revenues have been falling since hitting a historic high of $732 million in 2007, with 2011 revenues of $608 million down 2.2% from the previous year. Zenith has reduced its growth projections for the forecast period, reflecting both modest economic growth and “long-term softening” of the print medium. Zenith predicts magazine spending to reach $618 million this year, $633 million in 2013 and $646 million in 2014.
Digital is also becoming a “stronger focus” for publishers, with Zenith noting that digital subscriptions to Canadian House & Home – as reported by the Audit Bureau of Circulations – currently sit at 2,295 (approximately 1.4% of total circulation).
Maclean’s second annual “Rethink” issue, which allowed readers to access additional content through the use of augmented reality and QR codes, pushed the boundaries of print and provided a possible glimpse into the future of magazine publishing, said Zenith.
While the Vancouver Olympics provided a “big assist” to the out-of-home industry in 2010, ad sales slowed with the economy in 2011, resulting in total out-of-home sales of $480 million. Zenith projects out-of-home spending to increase 2.5% to $492 million this year, with much of that growth occurring in the second half.
An increase in digital options and shorter lead times put the out-of-home industry in “good position” to capitalize on advertisers keen to ramp up their marketing activity at the first positive sign, said the Zenith forecast.
Radio advertising grew 6% during the 2010-11 broadcast year, but Zenith is forecasting 3.2% growth for 2011-12. The forecast noted that the start of the next broadcast year will coincide with increased economic growth, which will help lift radio revenues by 5.4%. Like out-of-home, radio is expected to benefit from shorter lead times during the early stages of an improving economy.
