Magna predicts US full year OOH ad revenues to grow at +1.7%

In its latest report, MAGNA forecasts US media owners’ net advertising revenues (NAR) to grow by +3.6% this year (excluding the impact of cyclical events – Political & Olympics) to reach $185 billon, a new all-time high. This is in line with our previous forecast (June: +3.4%). Wherein this is a slower growth rate compared to an exceptionally strong performance in 2016 (+5.9% excl. P&O) but the moderate slowdown remains within what had already been anticipated by MAGNA. Neutralizing cyclical drivers in 2016-17, actual growth will be +1.8% this year.

In 2018, the return of even-year cyclical advertising drivers (mid-tem elections, Winter Olympics, Soccer World Cup) will help accelerate ad growth to +4.8% (unchanged from previous forecast) despite a slowdown in underlying spending (+3.1% excl. P&O). Ad sales grew by +4.2% in the second quarter of 2017 (excl. P&O), accelerating from a modest first quarter (+3.2%) and MAGNA expects 3Q and 4Q to grow by approx. +3.5% yoy.

OOH ad sales were nearly flat in the first half (+1% including cinema, compared to an average +4% in the last five years). This sudden slowdown was caused by spending cuts in two key verticals, automotive and movie studios, as they are both affected by slow sales (car sales and box office declining by 2% each year-to-date). Looking at market segments, the first half showed static OOH ad sales being flat while digital OOH sales are still growing thanks to organic inventory expansion.

In terms of environment, Street Furniture and Transit generated revenue growth in the first half while Billboard and Shopping Malls stagnated. Meanwhile in-theater ad sales shrank by 12% due to poor cinema attendance. MAGNA expects the second half to get slightly stronger, resulting in full year OOH ad revenues to grow by +1.7% to $7.9bn.