New reports released today by ZenithOptimedia, GroupM and Magna Global predict that both the old (Olympic Games, World Cup soccer) and the new (mobile and programmatic buying) will be key drivers of global ad spending in 2014 and beyond.
While their growth predictions vary – ZenithOptimedia is calling for 5.3% growth in 2014; Magna Global is predicting 6.5%, while GroupM revised its forecast downward to 4.6% from the 5.1% it predicted earlier this year – the media communications companies all singled out digital, and mobile in particular, as a key factor in revenue growth.
ZenithOptimedia called mobile the “main driver” of global ad spend growth, noting that it is the first time in 20 years that a new platform is expanding overall media consumption without cannibalizing other platforms.
It predicts that mobile will contribute more than one third (36%) of all new advertising spending between 2013 and 2016, followed by television (34%) and desktop internet.
It predicted mobile’s share of global ad spending to increase from 2.7% currently to 7.7% by 2016, helping it leapfrog radio, magazines and out-of-home to become the world’s fourth-largest ad medium.
The report predicted that smartphone penetration in 31 countries, including the U.S., Canada, the U.K. and Brazil, would increase from 37% this year to 64% by 2016, while tablet penetration will increase to 16% from 9%.
The Magna Global report, meanwhile, said that social media has migrated towards portable platforms and devices much faster than expected, noting that they have become the “default” devices for casual internet use at home and the dominant platform for digital social media use everywhere.
“Social and mobile seem to have found each other in perfect chemistry in 2013,” the report states. “The impressive success of tablets in the Western world and the rapid penetration of feature phones and smartphones in the developing world have contributed to this rapid shift in consumer usage,” said the report.
The report notes that social media companies, most notably Facebook and Twitter, have introduced ad formats specifically matched to portable devices that have met with “instant success” among marketers without alienating users. It said that the share of ad revenues derived by Facebook from ad insertions on portable devices has increased from 12% in 2012 to a projected 50% globally in Q3.
The report also noted that 2013 saw the rise of programmatic trading, including real-time bidding (RTB) and other automated platforms for video and display inventory buying.
Investment in programmatic reached $12 billion globally, with more than half of that investment ($7.4 billion) coming in the U.S. Of that $7.4 billion, $3.9 billion came via real-time bidding.
The report predicts programmatic spending to reach $32 billion globally by 2017, with the U.S. accounting for an estimated $17 billion. Nearly one third of programmatic spending ($10.5 billion) will be RTB based, said the report.
The U.S. will remain the most developed programmatic market globally, with 80% of all display-related spending coming in that fashion by 2017. While other international markets will lag behind, markets such as the Netherlands, the United Kingdom, France and Australia will all see significant increases in programmatic activity.
Magna Global also said that non-recurring sports events such as the Sochi Winter Olympics and the FIFA World Cup, as well as the U.S. mid-term elections, will enable TV revenues to increase 7.7%, a marked increase from just 1.8% growth in 2013.
GroupM’s “This Year, Next Year” report called for Canadian ad spending to increase 1.9% to C$13.9 billion in 2014, with digital leading the way with a 5% increase in year-over-year revenues to C$3.2 billion.
GroupM said that print media owners face “many challenges,” with ad revenues declining and more than a quarter (26%) of Canadians now owning a tablet. Newspapers and magazines are working to develop the optimal subscription versus free content mode, it said. However, the report also noted that Canada’s size helps to protect local media revenue, including both print and radio.
The Magna Global report predicted that global ad revenues will grow by 6.5% to US$521.6 billion next year (all figures in U.S. dollars), representing the largest year-over-year growth since 2010.
Digital was the fastest-growing media sector in 2013, with global revenues increasing 16% to $118 billion. Digital now accounts for nearly one quarter (24%) of all global ad spending.
Within digital, social networks generated more than $9 billion of advertising spending this year, a 54% jump from the previous year. Along with search, social media was a key catalyst in the jump in mobile ad revenues, which almost doubled to $16 billion.
