Advertising revenue set to drop by 5% this year

ADVERTISING REVENUES are on track to fall by more than 5 per cent this year, but will stabilise next year and return to growth from 2012, according to a report by PricewaterhouseCoopers (PwC).

Growth of 12 per cent in internet advertising will only slightly mitigate an expected 5.8 per cent decline in television advertising in 2010, PwC’s Entertainment Media Outlook report states.

Despite the return to growth in 2012, traditional advertising channels such as radio, outdoor and press will decline over the next five years, PwC said.

Across the Irish entertainment and media sector as a whole, internet access and advertising, video game revenues and TV subscriptions will be the main growth areas. Traditional branches of the sector will “continue to struggle”, in particular if they are dependent on advertising spend.

Overall, the sector will grow by a compound annual rate of 4.1 per cent over 2010-2014, when total revenues will reach €4 billion.

However, this rate of growth falls short of PwC’s forecasts for the global entertainment and media sector. The accountancy firm expects the global market to grow 5 per cent annually between now and 2014, reaching $1.7 trillion (€1.2 trillion).

The uncertain economic background “has done nothing to slow the ever-advancing digital transformation or the rapid consumer uptake of new media experiences”, PwC said.

Double-digit growth in revenues from internet access services and internet advertising will take revenues in these areas to more than €500 million and €175 million respectively.

TV subscriptions and licence fee revenues will grow to around €713 million by 2014, by which point the video games market will be worth €466 million. Both of these sub-sectors of entertainment and media will grow by a compound annual rate of 7 per cent over the period, PwC predicts.

“The trends in Ireland are similar to what is happening worldwide. The advancing digital transformation is driving audience fragmentation to a level not previously seen,” said Susan Kilty, a partner in PwC’s entertainment and media division.