ZenithOptimedia is calling for global ad spending to increase by 4.9% to US$545 billion (all figures in US dollars) in 2015, a slight 0.4% decrease from its previous forecast in September.
The company predicted “small downward revisions” across many regions, the result of what it described as a “minor but widespread decline” in advertiser confidence created by the conflict in the Ukraine and weak economic growth in the Eurozone.
The report also called for continued shifts within ad categories over the forecast period, as the internet and mobile continue to attract a greater share of advertising dollars.
The internet remains the world’s fastest-growing ad medium “by some distance” said ZenithOptimedia, with spending increasing an estimated 16.9% in 2014. The company is calling for average annual growth of 15% for the internet through 2017.
Display (a group including banners, online video and social media) is the fastest growing sub-category, with ZenithOptimedia calling for 18% annual growth over the forecast period.
The report said improved ad formats are making internet display “more interactive and attention-grabbing,” while the evolution of programmatic is allowing more sophisticated and efficient audience targeting. Measurement agencies are investing in research capable of measuring consumers’ exposure to traditional display ads more accurately.
The evolution of display has already led some broadcasters to trade ad packages featuring both online video and television. ZenithOptimedia is predicting online video to grow at 20% a year through the forecast period.
ZenithOptimedia reiterated internet advertising has grown largely at the expense of print, rising from 4% of total ad spend in 2004 to 24% this year; during the same period, newspapers’ share of global spend has plunged from 30% to 15%, while magazines has fallen to 7% from 13%.
The report is predicting internet spending to increase to 31.1% during the forecast period, with newspapers and magazines shrinking by an average of 2% a year (it is important to note the report only includes total for print editions, with advertising for websites, tablet editions and mobile apps rolled into the internet category).
In her Canadian commentary, Ruth Klostermann, executive vice-president strategic resources and new business development for ZenithOptimedia Canada, said publishers are struggling to replace lost print audiences with online subscribers, while paywalls are limiting their ability to attract new, younger readers.
She said the recent decision by the Toronto Star to drop its paywall and introduce a free tablet product modeled after Gesca’s La Presse+ product (which earns a reported 44 minutes of engagement per weekday and up to 60 minutes on Saturdays) will build online readership more quickly, with advertiser investment expected to follow.
Global mobile advertising expenditure is expected to hit $25.8 billion this year, representing nearly a quarter (21.1%) of internet spending and 5% of total ad spending. It is expected to rise to $68.2 billion over the forecast period, accounting for 36.8% of internet spending and 11.3% of overall spending – leapfrogging radio, magazines and out-of-home to become the fourth largest ad medium, and close to newspapers.
Klostermann’s Canadian commentary called for mobile to achieve another $300 million in sales growth this year, surging ahead of both magazines and out-of-home by what it called a “decisive margin” of almost $200 million.
Television attracted 39.6% of all global ad spending this year, though its share is predicted to fall to 37.4% by the end of the forecast period as desktop and mobile internet continue to grow.
While TV’s market share has grown steadily over the past 35 years, from 29.9% in 1980, the report said it has “peaked” and will begin falling back slightly. It said marketers are beginning to move small budgets from TV to online video, which is predicted to grow from 1.9% of global ad spend this year to 2.8% by 2017.
Klosterman’s commentary said spending on conventional TV is expected to soften by between 1-2% per year through the forecast period, with specialty continuing to achieve “modest gains” of 1.5-2.7% annually. She said specialty will have increased its share of the total TV ad spend to nearly 40% by 2015, compared to 33% in 2010.
While Canada was the world’s 10th largest ad market, with ad spend of $11.15 billion in 2014, it is expected to tumble out of the top 10 by 2017, with Argentina taking its place (though that country’s current growth is being fueled by inflation rather than added value).
The report said North America was the first region to suffer the effects of the financial crisis, but has also been quick to recover, with ad spending “more robust” than in Europe since 2010.
North American ad spend grew 4.6% this year, thanks to the Winter Olympics and U.S. mid-term elections. In the absence of those events, ZenithOptimedia is calling for 3.8% growth next year followed by 4.1% growth in 2016 – boosted by the Summer Olympics and Presidential Election.
China overtook Japan this year to become the world’s second largest ad market with annual spend of $45.5 billion, while ZenithOptimedia is calling for the UK to overtake Germany to move into fourth and South Korea to leapfrog Australia and France to take over seventh.
