TV's ad revenue stream faces crosscurrents

A year that began with a bang was interrupted by a quake, and now is ending with a whimper. Next year is projected to be better — but not for everybody.

The March earthquake and tsunami in Japan, which put a months-long halt to automobile production, combined with a moribund job market and a steady drumbeat of bad economic news to slam the brakes on television advertising sales. Early in 2011, economists predicted that TV advertising revenue in the U.S. would increase 6% this year to an all-time high. But during the summer the TV ad market cooled considerably, with the pace of growth slowing to less than 2% for the year. TV ad revenue is expected to end the year at nearly $68 billion — still a record, but the slowdown is a reminder of TV advertising's vulnerability. "The ad market has been slowly drifting downward over the course of the year," said Jon Swallen, senior vice president of research at Kantar Media, which monitors advertising spending. "Traditional media sectors are lagging, experiencing softness, which suggests broad-based caution on the part of advertisers." Seismic shifts in spending continue to roil the media industry. Those changes come on top of the recession, which prompted advertisers to reduce spending. Some of the biggest ad buyers — retailers, automakers, car dealerships and home sellers — have been particularly hard hit, and few are predicting a speedy economic recovery. Overall ad spending in the U.S. is expected to grow a meager 1.8% this year to $144 billion, Swallen said. MagnaGlobal recently cut its 2012 forecast to 2.9% growth in total ad spending, down from the nearly 5% that the agency was predicting just a few months ago.