ZenithOptimedia is predicting global ad spending to increase 5.3% to US$523 billion year, a slight downward revision of 0.1% from its previous forecast in June and a 0.2% revision from its April forecast.
Zenith predicted that display would continue to lead digital investment, accompanied by “rapid” expansion in mobile and “steady growth” in video
The global media services company, which released its quarterly media spending report on Monday, also shaved 0.4% off its 2015 ad spend forecast and 0.2% off its 2016 forecast, with downgrades in Central and Eastern Europe, North America (related to weaker network TV viewing and magazine circulation in the U.S) and the Middle East and North Africa.
The internet remains by far the fastest-growing medium, with Zenith calling for global growth of 16% between 2014 and 2016. TV remains the dominant ad medium, however, attracting 40% of global spending in 2014.
The report calls for 4.8% growth in 2014, thanks to the combination of the Winter Olympics, the FIFA World Cup and the U.S. mid-term elections. The report calls for TV to fall back to 3.1% growth in 2015, before rising 4.7% in 2016 – a busy year that includes the Summer Olympics, the European soccer championships and the U.S. presidential election.
Buoyed largely by digital investment, Canadian ad spending is expected to grow by a modest 2.3% to $11.5 billion this year. The report calls for gradual growth through 2016, when spending will hit $12.3 billion.
Digital
Canadian advertisers spent roughly $3.5 billion on digital last year, helping it surpass TV for the first time. Double-digit growth will continue through the forecast period, with digital accounting for about $4.8 billion – nearly 40% – of total ad spending by 2016.
Zenith predicted that display would continue to lead digital investment, accompanied by “rapid” expansion in mobile and “steady growth” in video. The report notes that mobile provides advertisers with “very effective” response and engagement rates, while video provides a focus on engagement beyond display and click metrics, such as completion rates and message takeout.
“Clients are embracing these new technologies to refine their digital marketing, and increasing the complexity of their execution tactics to improve brand recall and response,” said the report.
Programmatic buying is also growing in stature, as advertisers take advantage of the measurement and control available through platform buying, as well as the ability to dynamically optimize creative.
The emerging trend in programmatic is the private marketplace, with publishers directly contracting with agencies to allow programmatic platforms to access contextually relevant inventory with transparent pricing.
Television
The report also reflects the upheaval occurring within the television industry. Advertising on conventional TV was down 3.9% for the broadcast year ending August 2013, coming on the heels of a 4.9% reduction in spend the previous year.
While advertisers have shifted a significant portion of their TV buy into cable, overall investment in TV was down almost $50 million, with food, cosmetics and toiletries, alcohol and petroleum and auto service accounting for the biggest declines according to Nielsen Media Research.
Zenith is calling for conventional TV spending to decline at a rate of 2% a year, offset by modest gains of 3% a year for specialty. The report predicts that specialty will have increased its share of TV ad spend to 40% ($1.34 billion) by 2015, up from 33% ($1.11 billion) in 2010.
Radio
Radio grew just 0.9%, to $1.6 billion, in the broadcast year ended August 2013, with 5% growth in national sales – which now account for 30% of total revenue – compensating for flat (-0.7%) growth in local sales.
Tracking of national advertising by Nielsen found that retail, the industry’s largest advertising category, increased by 10%, accompanied by “substantial” increases from petroleum/auto parts, automotive and restaurants.
The largest reductions in ad spending were telecom and alcohol, along with “significant” cuts to lotteries, media and food. The report calls for modest growth throughout the forecast period, with local sales slowly improving with the economy.
The report said that the CRTC’s decision to allow CBC’s Radio 2 and Espace Musique services to carry advertising – four minutes of national advertising across two breaks per hour – for the next three years will help offset cuts to its annual parliamentary appropriation.
The public broadcaster must reapply to the CRTC at the end of the trial period, where it will be required to prove that advertising has not adversely impacted the radio market or audiences for the two stations.
Newspapers
Newspaper advertising was down 16.9% to $1.7 billion at the end of 2013 according to Newspapers Canada, with Nielsen Media Research figures indicating that the industry was “particularly hard hit” by reductions in automotive spending – with out-of-home, TV and radio seeing “healthy increases” from the sector.
Cuts in other newspaper-heavy categories, such as entertainment and telecommunications, also took a “significant bite” out revenues said the report. Among the industry’s bright spots was the travel and transportation category, a top-five category that saw year-over-year growth of 10%.
A report from Newspapers Canada indicated “slowing erosion” of print advertising, which was down 6.8% after a year of double-digit losses; however, the report also noted further declines in the automotive, telecom and real estate categories.
The report calls for newspaper advertising to account for $1.35 billion in spending by 2016, down more than $1.3 billion from its 2005 high of $2.65 billion. The report said that adapting to a digital-only future is of paramount importance for the industry if it hopes to repatriate lost print investment.
Magazines
The Zenith report predicts advertisers will invest $500 million in consumer magazines this year, down more than $200 million from the 2007 high of $732 million.
The cosmetics and toiletries category, which accounts for almost twice the spending of any other magazine category, was down 3.3% last year, while other top-10 categories including food (-11%), financial (-16%), hair products (-15%) and automotive (-11%) also experienced double-digit cuts. They were partially offset by gains in retail (10%), travel and transportation (+10%) and telecom (+41%). While a relatively small category, the restaurant category also tripled its magazine investment last year.
Out-of-home
Out-of-home has been gradually stealing share from other established mediums including print and TV, with Zenith calling for spending to hit a record high $503 million this year, growing to $530 million by 2016.
Several categories including restaurants, food and automotive contributed to the increases, with automotive shifting dollars from print, and food decreasing its investment in both print and broadcast.
The Zenith report said that telecom, financial services, media and alcohol all showed a “substantial” increase in out-of-home investment through the first six months of the year, with the Out-of-home Marketing Association of Canada (OMAC) noting that it is increasingly being used in conjunction with digital.
