James Dix, CFA of Wedbush in a new report notes that trends are Solid for Global Media Spending. He sees positive signs for large marketer spending with Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) Video.
Per Wedbush ad agency checks, the 2013 global ad spending growth outlook seems at least as high as at the beginning of the year, and media spending as a share of GDP could be on the rebound. The current global outlook for media spending reflects improvements in Japan offsetting a reduced growth outlook in certain southern European countries, and continued robust growth in the BRICs, etc. (upper single digits to low double digits; WPP this week said it expects its revenue in China to be up 10% this year). Wedbush ad market checks indicate that in Europe, spending outlooks are deteriorating in Italy and Spain, in particular, with some incremental weakness in Northern Europe as well. However, Japan, which is still roughly 10% of the global media market, is rebounding toward 3-5% growth for 2013, as compared to prior expectations for roughly flat growth.
Leon Cooperman: Why I Like Facebook [VIDEO]
Google’s Overall Growth
Google Inc (NASDAQ:GOOG)’s overall growth in spending from brands in developed markets could be getting healthy double-digit percentage growth contribution from display this year, driven by YouTube spending in particular. For ad agencies, approximately 15-20% of client spending is going to Google display (with the balance to search), and roughly half of this display spending is on YouTube. Given that this display spending by large marketers is up in the range of 75% in some markets this year, that would translate into at least a 10 percentage point contribution to Google Inc (NASDAQ:GOOG)’s overall revenue growth this year coming from its display business.
Channel checks, ad agency client spending on Google Inc (NASDAQ:GOOG) search is tracking up in the range of 25% in 2013. The reality is that the next best offering in search – Yahoo-Bing – often lacks sufficient scale to be competitive with Google for the budgets of large advertisers.
Per WPP’s Xaxis, CPMs continue to fall for online display inventory. This reflects the increasing supply of inventory, and technologies that allow larger marketers to use it at scale, such as the Xaxis platform itself.
For big brands, Facebook Inc (NASDAQ:FB) growth is accelerating in 2013 vs. 2012, fueled by fairly traditional, mass reach ad buys. Big brand spending growth in 2013 has accelerated from the 2012 pace, reflecting primarily the attractiveness of home page buys to large advertisers. Brands are encouraged that the increasing advertising on the platform is not currently having a noticeably negative impact on usage trends.
Video ad launch should help Facebook’s growth from the same large marketers attracted by video’s impact as well as Facebook Inc (NASDAQ:FB)’s reach. Agency checks indicate that this video inventory could command CPMs similar to TV. An unknown is how the videos will affect usage.
