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TV Advertising to Grow 5.8% in '08, with a Little Help from the Olympics

Despite widespread fears of a global economic recession, TV advertising net revenues worldwide will reach $123 billion in 2008, up 5.8% from 2007 - thanks in part to the impact of the Olympics - according to a new report from Informa Telecoms & Media.

In 2007, global TV ad revenues were up 3.5% from 2006, Informa said.

North America is expected to account for the majority of the 2008 revenue - nearly $46.3 billion - followed by Western Europe at nearly $32.2 billion:

Additional highlights from the forecast:

• Pay-TV advertising will bring in $18 billion in 2008 - double the amount from five years earlier - and account for 15% of total TV advertising net revenues in 2008.
• By 2012, global net TV advertising will reach $148 billion, up 21% compared with 2008 figures.
• However, net pay-TV advertising will grow at a much faster rate - up 39% over the same period - to reach $25 billion by 2012, or 17% of total TV advertising.

“These figures are for net advertising [revenue],” Simon Murray, author of the report, explained, saying Informa believes that this is the first time that TV advertising forecasts for so many countries (44 in the report) have been “homogenized and reflect only the revenues received by the channels and networks.”

“We have extracted agency commissions, production costs and, most importantly, we have removed discounts. Traditionally, advertising expenditure figures have been reported at rate card prices - i.e., before discounts have been taken out.”

Additional findings from the report follow.

Regional TV Revenue

• The US still has considerable influence over the global market, bringing in $43.2 billion in 2007 - or 35% of the world’s total.
• Japan, the world’s second-largest market but home to a sluggish economy, is more or less stagnant, with net TV advertising growing only 12% from 2007 to 2012.
• The fastest-growing territories are Russia and Romania, which are forecast to double their totals during the forecast period
• More rapid growth is expected in India and Indonesia; revenues there are expected to both rise about 70% during the forecast period.

Advertising Revenue per Household

• The global average for net television advertising revenue per TV household is running at more than $100:

• The US average will be the highest, at $380, in 2008; the lowest will be China, at $10, followed by India, $11.

Pay-TV Revenue

• North America’s influence over pay -TV advertising is even greater than for the total TV market: It took 62% of the total in 2007.
• However, that proportion is projected decline to a still-high 53% by 2012 as other regions gain market share:

• Eastern Europe & the Middle East will be the fastest-growth region, increasing 159% from 2007 to 2012.
• The UK is the second-largest pay-TV advertising market, contributing $2.23 billion in 2007. The UK is atypical - there is only one ad-supported channel taking an audience share of more than 10% (though non-ad-supported BBC1 also surpasses that level), and so ad revenues are spread among many channels.
• The UK will boast the highest proportion of pay-TV advertising as a proportion of total TV advertising, at about a third in 2008, followed by Korea and Canada at 30%.

“It is sometimes easy to forget just how large a market total TV advertising is. Pay TV, albeit a new sector in many countries…accounts for 15% of the total. It is only expected to grow to 17% of the 2012 total, even though pay TV advertising will increase by $7 billion,” Murray concluded.

About the study: “Global Net TV Advertising Forecasts” is, according to Informa, the first report to accurately report net TV advertising reflecting revenues received by both the channels and networks. The report includes illustrative statistics and forecasts to 2012 for 44 countries.