ZenithOptimedia: Ad Spending Growth to Remain Strong Over Next Two Years

September 22, 2014 World Screen
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LONDON: According to ZenithOptimedia’s new Advertising Expenditure Forecasts, the rapid development of digital advertising technology will help the global advertising market grow 5.3 percent in 2014, up from 3.9 percent in 2013, rising to 5.3 percent in 2015 and 5.9 percent in 2016.

The firm predicts that global adspend will grow 5.3 percent to reach $523 billion over the course of this year. Internet advertising is by far the fastest growing medium, which it forecasts to expand by 17.1 percent this year, as improving digital advertising technology makes Internet advertising cheaper and more effective. This growth is being driven by a broader spectrum of companies than traditional media, including digital specialists, tech companies and direct advertisers.

ZenithOptimedia forecasts traditional display advertising to grow at an average of 15.8 percent a year between 2013 and 2016, up from 12.3 percent a year between 2010 and 2013. Social media display is growing much faster, at an average of 29.9 percent a year between 2013 and 2016, with advertisers exploiting the explosion of mobile social media use and the ability to target across desktop and mobile. The firm forecasts online video advertising to grow by 24.2 percent a year between 2013 and 2016.

ZenithOptimedia expects Internet advertising to command 23.6 percent of global advertising budgets this year, exceeding the combined share of newspapers and magazines (22.7 percent) for the first time. By 2016, it expects the Internet to account for 28.3 percent of global adspend, having narrowed the market share gap between itself and TV (which remains the most dominant medium) from 15.9 percentage points to 9.9.

The global forecast for 2014 is fractionally below the 5.4 percent growth forecast by ZenithOptimedia in June. The main cause of the downgrade is the escalation of tensions between Russia and the West over the Ukraine crisis. ZenithOptimedia now forecasts Russia’s advertising market to grow just 1.7 percent this year, down from the 6.9 percent forecast in June and 9 percent in March. It still expects adspend in Ukraine to shrink by 32.5 percent this year.

Forecasts for Eurozone adspend growth are stable at 0.9 percent this year. Strong signs of recovery in some of the markets worst hit by the financial crisis—Ireland, Greece, Portugal and Spain—have helped counterbalance weakness elsewhere.

“Internet advertising is expanding rapidly as new technology makes it easier for advertisers to reach the right people at the right time with the right message, at an efficient price. The spread of ever more sophisticated mobile devices will help this expansion continue, sustaining steady growth in global adspend for the next few years,” said Steve King, ZenithOptimedia’s CEO of Worldwide.