ZenithOptimedia is calling for global ad spending to increase 4.4% to US$544 billion this year, a downward revision of 0.5% the company attributed to “severe” economic problems in Russia, Ukraine and Belarus, and a slowdown in China – a market that has grown so large that even modest changes visibly affect global totals.
The company’s latest Advertising Expenditure Forecasts is calling for 5.3% growth in 2016, boosted by both the Rio Olympics and the U.S. presidential election.
On a regional basis, the surging Latin American market led all markets with 11.4% growth in 2014-15. The company pegs North American growth at 3.5%, with the U.S. remaining the biggest contributor of new ad dollars – contributing 26% of the estimated US$79 billion that will be added to global ad spend between 2014 and 2017.
However, seven of the top 10 contributors to new global ad spend will be so-called “rising markets,” which are expected to contribute 43% of new ad spend over the next three years.
Canada was the world’s 10th largest ad market in 2014 with total ad spend of US$11.1 billion, but is expected to tumble out of the top 10 by 2017, replaced by Argentina (though the report said much of that country’s growth is inflationary).
The internet remains the world’s fastest-growing ad medium, with 18.5% growth in 2014 and projected annual growth of 14% over the next three years. Online video is the fastest growing digital category, growing 34% in 2014 and predicted to grow at 29% a year during the forecast period.
Much of its growth is being fueled by mobile, which accounted for 34% of all online video plays in Q4 according to the Ooyala Global Video Index, up from 17% a year earlier. Other contributing factors to online video’s growth include investment in research; the development of video products by major social media platforms; and increased sales via programmatic.
Digital’s overall growth has come primarily at the expense of print, with newspapers’ share of global ad spending shrinking to 15% in 2014 from 30% in 2004, and magazines’ share falling to 7% from 13% in the same period.
It’s important to note, however that spending on print-related websites, tablet editions and mobile apps is all included in the internet category. The report calls for newspapers and magazines to shrink at a rate of 3% and 2% a year respectively, during the forecast period.
THE CANADIAN PICTURE
After a “weaker than expected” 2014 that saw spending increase just 1.4% to US$11.1 billion, ZenithOptimedia is projecting Canadian ad spending to increase just 1.1% to $11.2 billion this year. The report said a fuller recovery for Canada is now at least another year out.
The report noted Canadian print media is eroding at 10% per year, while TV is also showing “unexpected” erosion on a year-to-date basis.
Mobile and online video fueling digital growth
The report calls for video and mobile growth to fuel a 10% growth in digital advertising, with display, search and video spending migrating from desktop to mobile – contributing to a 40% increase in investment in that platform.
At C$769 million, mobile has now surpassed both magazines and out-of-home in terms of ad spending, with the report noting it is likely to overtake digital display this year and possibly search by 2017. With Canadians among the most avid consumers of online video, the report is calling for advertiser investment in that sector to grow by 33% this year.
Television
Reports of slow sales in both conventional and specialty led ZenithOptimedia to reduce its estimates for the current broadcast year to a 4.5% decline from projected growth of 0.4%.
The report calls for spending on conventional TV to erode at a rate of 1-2% per year during the forecast period, with specialty achieving modest gains of between 1.5% and 2.7%. The report calls for TV spending to fall to US$3.1 billion by 2017.
It noted traditional TV could be feeling the effects of the abundance of viewing options available to viewers, such as Netflix and broadcasters’ own video-on-demand products, such as Shomi and CraveTV.
It said broadcasters could get some relief from the upcoming FIFA Women’s World Cup and the Pan Am Games, while a possible federal election in the fall will get the 2016 broadcast year off to a strong start.
Print media still falling
Investment in print newspapers plunged 14.5% to US$1.4 billion in 2014, with the report calling for further double-digit declines throughout the forecast period.
The report noted while both mobile and desktop circulation and ad revenues are growing, so is the revenue gap and the pressure for publishers to find the right business model.
After “moderate” declines in the previous three years, consumer magazine spending fell 15.5% to US$469 million last year, with ZenithOptimedia calling for further declines of 10% a year throughout the forecast period. Spending is projected to be US$350 million by 2017.
Radio
The report called for radio advertising to increase 1.3% to $1.6 billion this year, accounting for an estimated 14.1% of the total market.
Out-of-home
Out-of-home investment increased 6.1% to US$545 million last year – representing 4.8% of the total ad spend – and is expected to reach $578 million this year.
The report predicted more campaigns pairing mobile with out-of-home, while out-of-home companies continue to expand their roster of digital products. Those trends led ZenithOptimedia to predict “incremental” revenue growth for out-of-home throughout the forecast period.
