Strong Ad Spend Growth Forecast Worldwide

by , Oct 8, 2013, 11:56 PM
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According to the latest Advertising Expenditure Forecastsfrom ZenithOptimedia, the global advertising market is on course to grow 3.5% in 2013, Expectations for this year have leveled after a long period of slow erosion by bad economic news. The study projects stronger growth over the next two years of 5.1% in 2014 and 5.9% in 2015, primarily due to the European economy becoming healthier.

Growth of advertising expenditure and GDP 2012-2015 (%)

Year

GDP

Ad Spend

2012

+4.7%

+3.5%

2013

+5.6

+3.5

2014

+6.7

+5.1

2015

+7.0

+5.9

Source: ZenithOptimedia, October 2013

Despite these prospects for recovery, a steeper-than-expected decline in Eurozone ad spend in the first half has weighed down the forecast for ad spend growth in Mature Markets this year, which are reduced to 1.4% from 1.7% in June.

There has been no sign of a concerted advertising slowdown in Rising Markets, says the report, but Rising Markets still have young populations with improving education, infrastructure, productivity and adoption of technology. Their contribution to the world economy will continue to grow for decades, and forecasts for ad spend growth in Rising Markets this year are 7.6%, up from the 7.0% forecast in June.

Mature Markets are defined as North America, Western Europe and Japan, and Rising Markets are everywhere else.

Ad spend in North America is much more robust than in mature Europe. Consumer confidence, retail sales, job numbers and house construction are all trending encouragingly upwards. Ad spend grew a healthy 4.4% in 2012, thanks partly to the summer Olympics and the elections in the US. In their absence, the report forecasts a more subdued 3.4% growth in 2013, followed by firmer 4% to 5% annual growth in 2014 and 2015.

Despite the rapid growth of the Rising Markets, the US is still the biggest contributor of new ad dollars to the global market. Between 2012 and 2015 the report forecasts the US to contribute 28% of the US $74b that will be added to global ad spend. Seven of the ten largest contributors will be Rising Markets, contributing 44% of new ad spend. Overall, the report forecasts Rising Markets to contribute 64% of additional ad expenditure between 2012 and 2015, and to increase their share of the global market from 33% to 37%. 

Top Ten Contributors To Ad Spend Growth 2012-2015 (US$ Million, Current Prices; Currency Conversion At 2012 Average Rates)

Rank

Market

2015 Ad spend

1

 USA

$182,272

2

Japan

55,016

3

China

50,190

4

Germany

23,727

5

UK

21,182

6

Brazil

18,131

7

Australia

13,715

8

South Korea

12,917

9

Canada

12,838

10

Russia

12,617

Source: ZenithOptimedia, October 2013

The internet is still the fastest growing medium by some distance. It grew 16.4% over the course of 2012, and forecast at an average of 16% annual growth for 2013 to 2015.

Display is the fastest-growing sub-category, with 20% annual growth, thanks partly to the rapid rise of online video and social media advertising, which are growing at 25% and 33% a year respectively. Measurement agencies are investing in research that should measure consumers’ exposure to traditional display ads more accurately, and track their exposure to video ads across desktop computers, tablets and television screens. Some broadcasters are starting to trade packages that include both online video and television spots. Advertisers are now recognizing the value of social media for brand building and purchase consideration purposes.

Paid search is forecast to grow at an average rate of 15% a year to 2015, driven by continued innovation from the search engines, including the display of richer product information and images within ads, better localization of search results, and mobile ad enhancements like click-to-call and geo-targeting.

Online classified has been subdued since the downturn in 2009, since it depends heavily on the weak property and employment markets in the developed world. The report shows a forecast average annual growth of just 4% for the rest of our forecast period.

After several false starts, mobile advertising has now taken off, says the report, and is forecast to account for 37% of all growth in global ad expenditure this year, and 31% in 2014. Counted as mobile is all internet ads delivered to smartphones and tablets, whatever their format.

Mobile advertising is still relatively small, expected to total US$14.3b worldwide this year, or 2.8% of total ad expenditure, but it is growing extremely rapidly. The report forecasts 77% growth in 2013, followed by 56% in 2014 and 48% in 2015. By 2015, expected mobile ad spend is expected to total US$33.1b and account for 6.0% of total ad expenditure.

Desktop Internet advertising continues to grow more rapidly than any of the traditional media, even though mobile costs are substantially lower. 8% growth in desktop ad spend in 2013 and 2014, and 7% in 2015 is forecast. Total internet advertising, both desktop and mobile, to account for 20.4% of all ad expenditure in 2013, up from 18.3% in 2012, and forecast its share to rise to 24.6% in 2015, according to the report.

Internet advertising has principally risen at the expense of print, says the report. Between 2002 and 2012 the Internet’s share of global advertising rose by 15 percentage points, while newspapers’ share fell 12 points and magazines’ share fell by 5 points. Internet advertising is forecasted to increase its share of the ad market from 18.3% in 2012 to 24.5% in 2015, while newspapers and magazines will continue to shrink at an average of 3% a year. internet advertising is expected to overtake newspapers for the first time in 2013, and then exceed the combined total of newspaper and magazine advertising in 2015.

Internet Ad Spend by Type 2012-2015 (US$bn)

Year

Total Display

Classified

Paid Search

2012

$33.7

$11.0

$40.7

2013

40.2

11.5

46.9

2014

48.2

12.0

53.6

2015

57.6

12.6

61.4

Source: Zenith/Optimedia, October 2013

Television’s share of global ad spend has stabilized, after growing slowly but surely for most of the last three decades. Television accounted for 31% of spend in 1980, 32% in 1990, 36% in 2000 and 39% in 2010. Television’s market share is expected to peak in 2013 at 40.1%, before falling back marginally to 39.5% in 2015. However, overall video advertising is still on the rise and between them, television and online video attracted 41.2% of global ad spend in 2012, and is expected to attract 41.6% in 2013.

Share Of Global Ad spend By Medium (%)

Medium

2012

2015

Television

40.0%

39.5%

Internet

18.3%

24.6%

Newspapers

18.7%

14.9%

Magazines

8.5%

7.0%

Radio

7.0%

6.8%

Outdoor

6.9%

6.6%

Cinema

0.6%

0.6%

Source: Zenith/Optimedia, October 2013

The internet is the biggest contributor of new ad dollars to the global market. Between 2012 and 2015 the report forecasts internet advertising to account for 66% of the growth in total expenditure. The next biggest is television, which is forecast to contribute 36% of growth.

Contribution To Global Growth In Ad Spend By Medium 2012-2015 (US$M)

Medium

Contribution

Internet

$47,611

Television

25,982

Outdoor

5,611

Radio

2,564

Cinema

593

Magazines

-3,535

Newspapers

-7,116

Source: Zenith/Optimedia, October 2013

Steve King, ZenithOptimedia’s CEO, Worldwide, concludes that “… the stability of global ad spend growth this year… without Olympics and US elections… shows advertising recovery on track… promising stronger growth in 2014 and 2015… penetration of mobile handsets is playing a key role in driving advertising growth across the world… “

For more from ZenithOptimedia, please visit here.

 

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