Global mobile advertising expenditure to overtake desktop in 2018
Mobile advertising will total US$114bn in 2018, up from US$50bn in 2015, and will be larger than all other media except for television (which will total US$215bn, up from US$206bn in 2015).
Mobile advertising is responsible for almost all of the growth in global ad spend. We forecast it to grow at an average rate of 32 per cent a year between 2015 and 2018 and to contribute 87 per cent of all of the new ad dollars added to the global market during these years.
ZenithOptimedia forecasts desktop internet advertising to peak at US$114bn in 2017, before falling back slightly to US$113bn in 2018, as ad spend migrates from desktop to mobile.
Programmatic advertising will be 60 per cent of digital display in 2016
Programmatic advertising will account for more than half of digital display advertising (53 per cent) for the first time this year, and will increase its share to 60 per cent in 2016, according to ZenithOptimedia’s new Programmatic Marketing Forecasts, also published today. Programmatic advertising has risen to dominate the digital display market in just a few years, having accounted for just 12 per cent of display ad spend in 2012. Programmatic ad spend grew from US$5bn in 2012 to US$38bn in 2015, at an average rate of 100 per cent a year. Its growth is slowing down as it extends its dominance of the display market, but we expect programmatic advertising to grow another 34 per cent in 2016 and 26 per cent in 2017, at which point two-thirds of global display will be programmatic.
The US is the biggest programmatic ad market by a long distance, worth US$16.8bn in 2015 and accounting for 44 per cent of global programmatic ad spend. The UK comes second, worth US$2.6bn an d accounting for 7 per cent.
The internet to overtake television in 2018
Television is currently the dominant advertising medium, with a 38 per cent share of total ad spend in 2015. In 2018, however, we expect the internet to overtake television to become the largest single advertising medium. Looking at the ad market as a whole, we think television’s share peaked at 39.7 per cent in 2012, estimate it at 37.7 per cent in 2015, and expect it to fall back to 34.8 per cent by 2018.
However, one of the reasons for television’s loss of share is the rapid growth of paid search, which is essentially a direct response channel (together with classified), while television is the pre -eminent brand awareness channel – and we expect it to remain so for many years to come. We estimate television will account for 44.7 per cent of display expenditure (i.e. excluding internet classified and paid search) in 2015 and 42.9 per cent in 2018.
Audiovisual advertising is becoming more important for brand building
Audiovisual advertising as a whole – television plus online video – is gaining share of display advertising. Television offers unparalleled capacity to build reach while online video offers pinpoint targeting and personalisation of marketing messages. Both are powerful tools for establishing brand awareness and associations. We estimate that audiovisual advertising will account for a record 48.4 per cent of display advertising in 2015, up from 44.1 per cent in 2010, and expect its share to reach 48.9 per cent in 2018.
Digital editions will help magazine publishers increase total ad revenues by 2 per cent next year
Advertising in printed magazines is in decline across most of the world; in the US we forecast print magazine ad revenues to shrink 1.8 per cent in 2016. However, Zenith Optimedia estimates that US magazine publishers generate 20 per cent of their revenues from digital editions, and these revenues are growing rapidly. Taking these digital revenues into account, we predict that magazine publishers will enjoy an overall 1.8 per cent increase in total revenues next year.
Quadrennial to boost global ad spend by US$6.1bn in 2016
The world advertising market has been stable since 2011, growing at about 4 per cent -5 per cent a year, and we expect this stable growth to continue at least until 2018. 2016 will be a relatively strong year, with 4.7 per cent growth in global ad spend, up from 3.9 per cent in 2015. 2016 is a ‘quadrennial’ year when ad expenditure is boosted by the US presidential elections, the Summer Olympics and the UEFA football championship in Europe.
We forecast that the US election will provide a net US$3.2bn boost to US ad spend, especially to television and internet advertising, while the Olympics lifts global ad spend by a new US$2.0bn, especially to television and outdoor. UEFA Euro 2016 will boost ad spend by a net US$0.9bn, also concentrated in television and outdoor, mainly in Europe but also in Latin America and Asia Pacific.
India, Indonesia and the Philippines are hotspots of ad spend growth
Adspend growth is slowing down in three out of the four BRIC markets that were responsible for much of last decade’s ad market expansion. Between 2005 and 2010 spend grew at an average rate of 10.7 per cent a year in Brazil, 10.3 per cent in Russia and 16.9 per cent in China. Brazil and Russia are now in recession, and China is slowing down, and between 2015 and 2018 we expect annual growth to slow to 3.5 per cent in Brazil, 5.3 per cent in Russia and 7.5 per cent in China. Russia and China will continue to beat the global ad spend growth rate, however.
The fourth BRIC market – India – continues to combine rapid growth and large scale, making it a distinct hot-spot of ad spend growth, together with Indonesia and the Philippines. These markets are benefiting from sustained, healthy economic growth and strengthening personal consumption. These are the only three markets in which ad spend is growing at double-digit annual rates and will expand by at least US$1bn between 2015 and 2018: we forecast the Philippines to expand by US$1.2bn over this period (at 13 per cent a year), India by US$3.0bn (also 13 per cent a year) and Indonesia by US$4.1bn (17 per cent).
“Growth of the global ad market is being driven by advances in technology, especially mobile and programmatic tech,” said Steve King, ZenithOptimedia’s CEO, Worldwide. “But television remains by far the most important channel for brand communication, and online video, its digital offshoot, is increasing the audiovisual share of global display advertising.”
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