When the real estate market started its steep plunge in 2007 and 2008, the ad market for this sector dropped as well.  A recently published report by Borrell Associates points to a 20% decrease in real estate marketing during 2009 which brought total spending from $24.4 billion to $19.6 billion. But the outlook for 2010 is improving in the category. Analysts at Borrell are looking for a 3% rise in spending.

Here is where Borrell expects to see changes:

• Online marketing for real estate increased last year and will continue to gain market share in 2010.
• Government agencies and banks will up their placements in local newspapers to sell distressed properties.
• Realtors and other sellers will move into more use of one-to-one marketing techniques such as e-mails, thus bypassing local media properties.
• Marketers will use more online video to tout features of properties that are available.

While Borrell analysts acknowledge that the general slowdown in the real estate sector may endure for up to 5 more years – based on unemployment figures and high delinquency rates in current mortgages – they also expect that some of the marketing changes they are seeing will be permanent.

[Source: Research and Markets release, January 22, 2010]

While industry experts have been predicting a general recovery in the U.S. ad market this year, Anthony J. DiClemente, a New York-based analyst with Barclays, gets specific. In his latest forecast, DiClemente is looking for an overall 3.5% rise in this sector.  DiClemente links sporting events such as the Olympics and the World Cup to a projected 7.8% rise in the national TV market.

DiClemente is also expecting an 8.9% rise in online marketing. This prediction can be justified by considering the still positive growth rate in the online sector and the general economic recovery.

The most exciting piece of good news for media companies, though, comes via the latest ruling by the U.S. Supreme Court.  Since 2002, when the McCain-Feingold campaign finance reform law went into effect, corporations, unions and nonprofit groups have been limited in the timing of their ad placements. Specifically, these entities had been barred from advertising 30 days before primary elections and 60 days before general elections.  Late last month, the Supreme Court lifted the restrictions on advertising by ruling that the law discriminated unfairly against select groups.

COO Evan Tracey at TNS/CMAG expects an additional $500 million could enter the ad market in the 2010 elections as a result of the ruling.  Local media companies, especially those with TV and radio offerings, should garner about half of the total election spending of $2.8 billion while the rest will go to national broadcasters. States with hotly contested gubernatorial campaigns will include California, New York, Texas and Ohio.

Despite this good news for the media industry, not all segments will enjoy growth rates. DiClemente is expecting declines in newspapers (5.8%) and magazines (3%). These figures are better than previously predicted but underscore the transitory times in which media companies operate.

[Sources: Rabil, Sarah. U.S. Advertising to Rise 3.5% in 2010, Barclays Says, Bloomberg.com, 1.28.10; Gough, Paul. Supreme Court Ruling, Reuters.com, 1.21.10]

In yesterday’s blog, I discussed MarketingSherpa’s study on the maturation of social media. Along with social media, the entire online marketing industry continues to grow and is predicted to reach $55 billion or 21% of all ad spending by 2014.  And, as I mentioned yesterday, funding the new initiatives comes at the expense of budgets previously allocated for traditional media. How bad is the damage to traditional media? Forrester Research has assembled some specific numbers in its Interactive Marketing Projections study released last year.

About 60% of companies responding to a Forrester Research survey on interactive marketing indicate they will decrease allocations to traditional media outlets by the following percentages in order to fund their online activity:

• Direct mail: 40%
• Newspapers: 35%
• Magazines: 28%
• Television: 12%
• Yellow pages: 11%
• Outdoor: 9%
• Radio: 8%

Here are the reasons managers give for planning to increase their interactive marketing budgets:

Poor economic conditions – They plan to use more of the less expensive interactive tools available.

Consumers expect interactive relationships – The younger demographics are especially receptive to social interaction with brands.

Increasing power of marketing departments in corporate structure – Because interactive marketing affords a closer customer relationship, marketing departments are gaining power and access to technology when enables them to fine tune their analytics.

Interactive marketing works – Companies can increasingly point to the effectiveness of the medium.

After seeing a huge increase in applications, the associate dean for corporate relations at Cornell University’s The Johnson School plans to fund interactive marketing at between 60-70% of total marketing and sums up what many decision makers believe, “If we do [new media] strategically, we can target more effectively and do it more cost-effectively as well.”

[Source: Interactive Marketing Projections, Forrester, 2009]

Local TV and radio station operators have some small reasons to cheer about in 2010. The business outlook is predicted to remain difficult but analysts expect gains of between 2 and 3% in these industries this year. Where will the gains be realized? Writing for Mediaweek, Katy Bachman compiled the following information.

TV

While the Democrats may be obsessing about maintaining their Congressional majority, TV stations are ready to sell ad space to candidates of all parties. And there will be issue advertising as well as political action groups spend money in an attempt to sway public opinion. Some industry watchers expect 2010 political advertising to bring in $3.3 billion in TV advertising.

But station operators know political advertising is a short-term fix. In the long run, they’ll be looking to expand revenue streams. By the end of 2010, sources such as the Internet, mobile, digital sub-channels and retransmission will comprise up 13% of TV revenue. Paul Karpowicz, president of Meredith Broadcasting, says “[i]n an environment where ratings are scarce, if you can create a format that has sponsorship, product integration elements, that becomes attractive.”

Radio

Analysts still expect radio to struggle. The good news is that many heavy radio advertisers such as “auto, telecom and consumer products, retail, finance/insurance, and fast food” are returning to the media format.  Radio station operators are also looking to alternative revenue sources, especially online.  But it may be several years before the industry could anticipate 10% of revenues coming from online. Bachman notes that advertisers perceive radio as lacking ‘buzz’. To counter the problem, some stations are turning to personalities to pump up ratings and excitement.

In any event, operators, for now, may have witnessed the end of the steepest declines in revenue.

[Source: Bachman, Katy. AdweekMedia Forecast 2010, Adweek, 1.2.10]