Advertising will continue to strengthen over the next three years, with global advertising spend growth forecast to rise from 3.9% in 2013 to 5.5% in 2014. Growth is then set to increase to 5.8% in 2015 and 6.1% in 2016.
This growth will be driven by improvement in the global economy, the spread of programmatic buying, and the rapid rise of mobile advertising.
According to ZenithOptimedia’s new Advertising Expenditure Forecasts, global adspend will see a boost this year by the three ‘semi-quadrennial’ events – the Winter Olympics, the football World Cup, and the mid-term elections in the US – which will benefit television in particular.
Advertisers are also gaining in confidence as growth returns to the Eurozone, which now looks more stable and less likely to deliver more negative shocks to the world economy.
In general, advertisers are in a strong position to invest in expansion, with large reserves of cash and high profitability. In view of this, we expect growth to increase in each of the three years we forecast.
Programmatic buying to boost internet display
The internet is still the fastest-growing medium as it grew 16.2% in 2013. A forecast of an average of 16% annual growth for 2014 to 2016 was made and the fastest-growing sub-category is display, which we forecast to grow at 21% a year to 2016.
Traditional display (banners and other standard formats) is growing at 16% a year, boosted by the revolution in programmatic buying, which provides agencies and advertisers with more control and better value from their trading.
Social media, growing at 29% a year and online video, growing at 23% a year are also starting to benefit from programmatic buying. Internet display is forecast to overtake paid search growing at 13% a year for the first time in 2015.
In 2016 Zenith expects internet display adspend to total US$74.4bn, while paid search adspend totals US$71.1billion.
Mobile still on the rise
Mobile advertising has now truly taken off and is growing six times faster than desktop internet and is forecasted to grow by an average of 50% a year between 2013 and 2016. This is driven by the rapid adoption of smartphones and tablets.
According to the agency’s study the estimated global expenditure on mobile advertising was US$13.4bn in 2013, representing 12.9% of internet expenditure and 2.7% of advertising across all media. By 2016 we forecast this to rise to US$45.0bn, representing 28.0% of internet expenditure and 7.6% of all expenditure.
This means mobile will leapfrog radio, magazines and outdoor to become the world’s fourth-largest medium by the end of our forecast period.
“Advertisers are gaining in confidence as the world economy returns to stable growth. They will find plenty of opportunities to generate strong returns on their advertising investment in the fast-growing digital media, but should remember that television has lost none of its power to reach large and engaged audiences,” said Steve King, ZenithOptimedia’s CEO, Worldwide.
Television still going strong
Television attracted 40% of spend in 2013, nearly twice that taken by the internet (21%). The agency forecasts television adspend to grow 5.2% in 2014, up from 4.4% in 2013, as it gains the most of the benefits of the Winter Olympics, football World Cup and mid-term US elections.