ZO: Global adspend to return to pre-financial crisis growth rates

Advertising, Media, Studies

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, ZenithOptimedia (ZO) predicts, adding that the growth will be driven by improvement in the global economy, the spread of programmatic buying, and the rapid rise of mobile advertising.

ZO’s new “Advertising Expenditure Forecasts” estimates that global adspend will be boosted this year by the three ‘semi-quadrennial’ events – Winter Olympics, Football World Cup, and US’ mid-term elections – which will benefit mainly to TV.

Advertisers are gaining confidence as growth returns to Eurozone, which looks now 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.

Eurozone emerged from recession last year, and its recovery appears to be gathering pace, which encouraged advertisers to start committing higher budgets to the region (after the 15% drop in adspend since the start of financial crisis)

Eurozone adspend dropped 3.0% in the beginning of 2013, but, by the end of the year, several key media owners reported growth of ad revenues. In 2014, ZO estimates Eurozone adspend will grow 0.7%.  Finland, Italy and Greece still see declining ad budgets, but the situation should stabilize in 2015, helping Eurozone to accelerate to 1.6% growth in 2015 and 1.7% in 2016.

Television continues to be dominant as advertising medium, with 40% of total budgets attracted in 2013, almost twice compared to online (21%). TV offers unparalleled capacity to build reach, and establish brand awareness and associations and that is why ZO forecasts TV budgets will grow 5.2% in 2014, up from 4.4% in 2013

Internet keeps gaining momentum and, after a 16.2% growth in 2013, it will continue to grow with an average rate of 16% per year between 2014 and 2016. The fastest growing online category is display, forecast to grow at 21% a year to 2016. Traditional display (banners and other standard formats) is growing at 16% a year, while social media (growing at 29% a year) and online video (23% a year) are starting to benefit from programmatic buying, which is helping to sustain their rapid growth. ZO expects internet display to overtake paid search (which is growing at 13% a year) for the first time in 2015, while, for 2016, forecast is that internet display adspend will reach to total US$74.4BN, while paid search adspend will be of US$71.1BN.

Mobile advertising boomed and is growing 6 times faster than desktop internet. The estimated growth for mobile advertising is of 50% a year between 2013 -2016, driven by the rapid adoption of smartphones and tablets. On the other hand, desktop internet advertising is forecast to to grow at an average of 8% a year.

According to ZO,  global expenditure on mobile advertising was US$13.4BN in 2013, namely 12.9% of internet expenditure and 2.7% of advertising across all media. By 2016, ZO expects it to rise to US$45.0BN (28.0% of internet expenditure and 7.6% of all expenditure), which means mobile will become fourth largest medium in the world, over-passing radio, magazines and outdoor

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

Steve King,

ZenithOptimedia’s CEO, Worldwide