Direct media ad revenue 'to struggle' this year: MagnaGlobal

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Revenue from direct media advertising will grow by 0.8% this year, a 0.7% increase compared with 2010, according to the “US Media Advertising Revenue Forecast” from MagnaGlobal, a media firm.

Direct media, which the firm defined as Internet Yellow Pages, paid search, lead generation, print directories and direct mail, will perform more poorly than mass media for a second consecutive year. However, direct media advertising revenue will ultimately grow at a greater pace than mass media advertising revenue in the long term, the firm said. Direct media advertising revenue will grow 3.9% by 2016, compared with the 3.7% growth in mass media advertising revenue in that time.

Paid search revenue will lead the “struggling direct media segment” this year, according to the report. Paid search revenue will increase 9.6% in the next five years and 10.4% this year, according to MagnaGlobal.

“Paid search is competitively priced, relative to the other media,” said Alex Feldman, manager of global forecasting at MagnaGlobal. “It's easier to access if you're a smaller business, and a growing number of people are going online.”

“If you're Google, you should be happy [about this report],” he added. “Paid search is the fastest growing segment of direct.”

Direct mail revenue will grow 1.1% this year and 3.4% in the next five years, according to the report.

“Direct mail did a lot better than we thought,” said Feldman. “It will grow each year within the next five years. But compared to electronic media, direct mail and directories are at a disadvantage.”

Revenue generated by print directories will decrease 18.6% this year and 15.9% in the next five years, according to the report.

“The online [directory] numbers somewhat make up for the losses, but they are nowhere near offsetting them,” said Feldman.

Revenue from Internet Yellow Pages will increase 9.7% this year and 6.7% in the next five years, according to the report. Lead generation revenue will increase 0.2% in the next five years but will decrease 0.6% in 2011, according to MagnaGlobal.

The report predicted that overall US media supplier advertising revenue will grow 3.1% this year, a slight downtick compared with the 3.2% growth of 2010.

Revenue from awareness-driven mass media advertising will grow 10.8% in 2011. Revenue from national digital advertising will grow 18.7% in 2011, driven by strong growth in display, online video and mobile budgets, according to the firm.

MagnaGlobal is the strategic media investment arm of Interpublic Group's Mediabrands Worldwide agency.

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