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US ad spending to rise 2.8% this year: Kagan

The US advertising market is on the mend in 2010, according to a study from SNL Kagan, a media and advertising sector intelligence firm.

US ad spending is projected to rise 2.8% this year to $210.5 billion, the first increase after two years of declines, according to the firm. Ad spending is expected to continue to grow in the next decade, reaching $214.3 billion in 2011 and $275.8 billion in 2019.

“I think a lot of it has to do with government spending, ‘Cash for Clunkers,’ housing subsidies, etc.,” said Derek Baine, senior analyst at SNL Kagan.

The strongest advertising growth in 2010 will occur in mobile, broadcast TV and the Internet, according to the study, “Advertising Forecasts: US Market Trends & Data for All Major Media.”

Mobile is expected to see a high compound annual growth rate of 40% from 2010 to 2020, reaching the $1 billion mark as soon as 2012. Internet advertising will grow from $4.7 billion in 1999 to a projected $27.8 billion in 2011, reaching as much as $60.1 billion by 2019. Television will remain strong, with cable ad spending growing from about $12 billion in 1999 to $30.2 billion in 2011, reaching more than $55 billion in 2019.

However, spending on direct mail has fallen $14.3 billion in just two years, and it is projected to drop from its peak of $60.3 billion in 2007 to $30 billion in 2019.

“It is a function of postage rates rising, decreasing ROIs and a shift to mew media,” explained Baine. SNL Kagan also predicted that ad spending in daily newspapers will drop from about $42.2 billion in 2007 to $23 billion in 2011.

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