ZenithOptimedia: Adspend to Grow by 5 Percent in 2015

December 8, 2014 World Screen
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LONDON: ZenithOptimedia’s new Advertising Expenditure Forecasts predicts that global adspend will grow 4.9 percent to reach $545 billion in 2015, thanks to the rise of mobile advertising and social media, as well as the transition to programmatic buying of digital display.

The global economy is expected to improve, but advertising faces a tough year‐on‐year comparison after the Winter Olympics, World Cup and U.S. midterm elections in 2014. Adspend growth will therefore be slightly below 2014’s 5.1 percent. 2016 marks a quadrennial year—with the Summer Olympics, U.S. presidential elections and the UEFA European Football Championship—ZenithOptimedia expects these events to drive adspend to 5.6 percent growth that year, before it slips back to 5.2 percent in 2017 in their absence.

Television is still, by some distance, the dominant advertising medium, attracting 40 percent of spend in 2014. ZenithOptimedia forecasts television adspend to grow by an average of 3 percent a year through to 2017. Despite this healthy growth, TV’s share of global adspend is likely to fall back slightly over the next few years, as desktop and mobile Internet grow much faster. Television’s market share has grown steadily over the last three-and-a-half decades, from 29.9 percent of spend in 1980 to 39.6 percent in 2014. ZenithOptimedia believes the medium may have now peaked, however, and forecasts it to fall back slightly to 37.4 percent in 2017. For online video, ZenithOptimedia expects growth from 1.9 percent of global adspend in 2014 to 2.8 percent in 2017. The audiovisual share of the market will therefore fall by only 1.3 percentage points, from 41.3 percent in 2014 to 40.2 percent in 2017.

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Global adspend growth is being held back by weakness in Japan and the Eurozone. Japan’s economic problems limit its ad market between 2 percent and 3 percent annual growth, and ZenithOptimedia does not expect it to improve over the forecast period. The Eurozone, however, is set to end 2014 with its first year of growth since 2010, with further improvement expected over the next few years. Adspend across the Eurozone fell by 15 percent between 2007 and 2013; Greece, Portugal, Spain and Ireland lost 49 percent of their adspend over this period, while France and Germany were fairly stable, shrinking by just 3 percent.

Greece, Portugal, Spain and Ireland have started to make recoveries in 2014, and over the next few years these markets are expected to outperform the Eurozone average, growing at 5.4 percent a year through to 2017. Their recovery will help Eurozone adspend grow 0.8 percent in 2014, a marked improvement on its 2.9 percent decline in 2013. The core economies of France, Germany and Italy (which together account for about two-thirds of the Eurozone economy) are flat. ZenithOptimedia forecasts adspend in France to shrink at an average rate of 0.3 percent a year between 2014 and 2017, while Germany grows by just 1.3 percent and Italy by 1.5 percent, below the Eurozone average of 2 percent.

Outside the Eurozone, the U.K. is currently booming, thanks to the rapid adoption of Internet advertising. Adspend in the U.K. grew 5.1 percent in 2013 and is expected to end 2014 up by 8 percent, followed by 7.9 percent growth in 2015.