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MagnaGlobal shrinks 2011 direct revenue forecast

Direct media advertising revenue will increase by 0.5% this year, according to media firm MagnaGlobal‘s revised forecast for 2011. The firm had predicted in April that the category would grow by 0.8% this year. It downgraded projected growth for direct mail from a 1.1% increase to 0.2%.

MagnaGlobal also downgraded its overall US ad revenue forecast from 3.1% growth to 2.9% growth.

Direct media, which includes Internet Yellow Pages, paid search, lead generation, print directories and direct mail, will be weighed down by declines and negligible growth in offline direct channels this year, the firm said.

“It seems that the drag from First Class mail is more than offsetting any positive growth from Standard mail, so we’re expecting pretty much flat growth for 2011 in direct mail,” said Alex Feldman, manager of global forecasting at MagnaGlobal.

Revenue from print directories will drop 20.6%, according to the report, which previously forecasted an 18.6% decline.

However, the projected growth in direct online media revenue is expected to offset the offline numbers, according to MagnaGlobal. The report predicts direct online media will rise by 10.7% in 2011. Paid search revenue will increase by 12.1% this year, according to the report, up from previous expectations of 10.4% growth.

Feldman said that the algorithmic changes that search engines made earlier this year to emphasize content producers over content aggregators influenced the firm’s updated projections.

“If you think about what the algorithmic change has done, larger advertisers probably have to bid more for keywords because they can’t get to the high results just through search engine optimization anymore,” he said. “So they’re going to have to work harder to get higher, and that may entail paying more for the keywords.”

The estimated 8.5% growth of Internet Yellow Pages’ ad revenue will also bolster the direct online media revenue category, according to the report. Feldman said that competition from daily deals sites such as Groupon has impacted Internet Yellow Pages’ ad revenue.

“Frankly, when you think about the alternate avenues for advertisers who would use Internet Yellow Pages, I think this year you’ll see much more use of the coupon sites,” said Feldman. He added that he is considering accounting for the daily deals sites’ ad revenue in future reports, but must first determine in what segment to place them.

“It’s somewhat like Valpak but online,” he said. “It’s kind of a hybrid. It’s not email advertising in the sense that there are no display ads in the email. We’ll do it in the future, but I still need to think about it.”

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