Digital Ad Spend Will Surpass TV By 2017

Global Digital advertising expenditures will surpass TV spending by 2017 -- and the phenomenon is already occurring in some of the world’s largest ad markets.

Speaking at an investor conference last week, Interpublic Group CEO Michael Roth noted that company research shows that one-third of all ad expenditures are currently allocated to digital.

Roth said that IPG’s research and marketplace intelligence unit Magna Global is predicting that by 2017, more dollars will be allocated to digital than TV.

And in China, where spending growth remains in double digits for the foreseeable future, digital ad expenditures will surpass TV this year, according to a just released GroupM forecast for the country.

TV spending in the country is projected to total $36 billion this year, representing 47% of ad spending. That said, the GroupM report notes that “TV still holds a dominant place among all forms of media in terms coverage and influence.”

For example, GroupM reported that 45% of the top 10 “hot topics” on Chinese social network Sina Weibo were “inspired by TV programs,” through the first four months of 2014.

Last month during a WPP conference call with analysts, the holding company’s chief forecaster Adam Smith was asked if the marketplace had reached an “inflection point,” that signaled a much steeper decline in the amount of TV ad spending globally. Smith replied, “not like print, but we are managing a transition. It’s more of a slow burn thing,” with TV.

IPG’s Roth, speaking at a Goldman Sachs conference last week, agreed. “There’s no big bang, if you will,” he said.

And he also agreed with Smith that it’s more about managing a transition, which is why IPG is embedding digital across its offering. “There’s no uber digital capability,” he said. Rather, “we are making it a part of the DNA of all of our agencies. It’s a part of everything we do.”

And the flip side to that is that shops like R/GA, which started as pure digital operations are morphing into full-service units. R/GA for example, created a Super Bowl commercial for audio gear marketer Beats earlier this year. “They’re no longer viewed as just digital,” said Roth or R/GA.

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8 comments about "Digital Ad Spend Will Surpass TV By 2017".
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  1. Nicholas Schiavone from Nicholas P. Schiavone, LLC, September 15, 2014 at 7:26 p.m.

    Dear Steve, "... in some of the world’s largest ad markets" ??? What about focusing on the US instead of the Globe for a moment? The average person in America consumes 12 times more "TV" hours than "Digital Video" hours. In a sense, we are talking about the difference between an inch and a foot. Better still we might want to visualize a difference in time tantamount to the difference in height between New York's One World Trade Center (1776 feet) and Paris' Arc de Triomphe. Of further concern to this commentator is the MAD article's failure to disclose how much of the "Digital" video is actually "over- the- air"/"through-the-cable"/"over-the-fiber-optic-thread" TV in a more convenient (e.g., smaller) form (i.e., PC Screen, Tablet or Smart Phone.) The world of TV is not coming to an apocalyptic end, it is simply experiencing a natural evolutionary process. Research and business professionals do themselves a serious disservice by resorting to the logical fallacy of celebrating or obsessing on "distinctions without a difference." Obviously, Nielsen and other businesses with vested interests would love it, if such distinctions were permitted to blur our vision and distort our financial and programming judgments. Near as I can tell from US Nielsen data "Digital Video" accounts for LESS than 2% of the average person's day. (And I interpolate that 90% of Digital Video time is simply TV time in another form.) Does that justify the corporate hysteria that floats more business than one would care to measure today? It's time for trip to Paris to gain a better sense of perspective. Au revoir, Nicholas Schiavone

  2. Ed Papazian from Media Dynamics, September 16, 2014 at 7:47 a.m.

    As I have pointed out before, the bulk of online ad spending---- at least in the U.S.-----is of the promotional and direct response variety. When it comes to branding ads, which, spearhead most campaigns to generate consumer awareness and intent to buy motivation, the "old" media---especially "linear TV" ---- continue to be dominant. While online is making some inroads in luring branding dollars----and it's about time, I may add----major issues, like ad "viewability" need to be addressed before a real dent in TV's ad budgets will take place.

  3. Patrick Stasolla from St. Jacques Marketing, September 16, 2014 at 8:17 a.m.

    Classic abuse of numbers and misleading headline meant for junior eyes. Major blind spot to the American reader.

  4. Neil Hunter from Consumer Kinetics Inc., September 16, 2014 at 12:26 p.m.

    No apocalyptic end coming, but as an industry leader said so eloquently last year "it's the early 50's and some of you are still working on your radio campaigns"......Time to embrace all platforms, and the ones that return the best measurable ROI wins.

  5. Nicholas Schiavone from Nicholas P. Schiavone, LLC, September 16, 2014 at 1:04 p.m.

    Hats off to Patrick Stasolla for his arm's length perspective. Unfortunately, Neil Hunter's calendar must be missing, as this is not the early 1950's. Perhaps, Neil is unfamiliar with hyperbole as a literary device. Per se, it's neither unique nor outstanding. More critically, there is a difference between hyperbole and insult. There is no "eloquence" in a so-called "industry leader" telling an audience they are out of touch by about 60 years. Moreover, there is no excuse for casting aspersions on the effectiveness of radio. Today, as in the past, radio takes many wonderful forms (i.e., Over-the-air, Digital broadcast, Over-the-Interenet, Podcasting, On Demand, Short Wave) and offers programming as enlightening, entertaining and edifying as any video or print platform can do. To reduce marketing and media planning to a numerical and m4easurement-based survival of the fittest contest is primitive and counterproductive. OK! Even foolish!! What about synergy? What about the theater of the mind? What about imagination, innovation and collaboration? Yes, Neil, you said "embrace all platforms." Bravo. But you end by declaring that the "winner" is the platform with the best measurable ROI. Just what does that mean? Do you even know? It's somewhat like saying we should trust the tallest man in the room. What about women? What about men of average or shorter heights? It's not about quantitative measurement or calculation alone. That is basically thought-lessness applied to business. Our focal point needs to be thought-fullness and reflection. There is a matter of practical wisdom and good judgment that must become part of who we are and how we work. Then, all will be well. Peace

  6. Neil Hunter from Consumer Kinetics Inc., September 16, 2014 at 3:14 p.m.

    Ouch feeling a little singed, thanks Nicholas. Your quote "experiencing a natural evolutionary process", I totally agree with. The rest of your comments are well written, but I can and will choose to pass on the majority of your passionate ramble, as at no point did you suggest the value in any evolution will be in the results. If it is not about measuring the results, then nothing has really evolved at all. Accountability is the new natural evolution of all formats. I happen to love how radio has evolved, as I mentioned no apocalyptic end required.

  7. Nicholas Schiavone from Nicholas P. Schiavone, LLC, September 16, 2014 at 5:32 p.m.

    Dear Neil, I amble, but I do not ramble. There is nothing confused or inconsequential about my POV on this matter. And precisely which platforms have the "best measurable ROI('s)"? And why do you think that is so? The burden of proof is on you to explain fully your novel "theory of relativity" of return. If "Accountability is the new natural evolution of all formats" then reductio ad absurdum is the ersatz evolution of all media planning. Enough with using "Accountability" as the hysterical mask for Digital histrionics. "Not everything that counts can be counted, and not everything that can be counted counts." (A well-worn aphorism said to have hung on a wall in one of Einstein's offces.) What is needed is a media calculus that embraces practical wisdom, effectively balancing qualitative and quantitative considerations in a reflective and thought-filled manner. "Calculation alone doesn't count." (An un-worn aphorism from a wall in my office.) Peace and Thank You. Sincerely, Nick

  8. Doug Stine from Vertical Ascent, September 20, 2014 at 1:53 p.m.

    Much of this depends on which resource source you consult. According to Emarketer, worldwide ad spending was $545 billion this year, with digital accounting for more than 25%. Nielsen, on the other hand, notes that as of January of this year, TV spending far exceeded any other media at 57.6% followed by Newspaper (18.8%), Magazines (9.9%), Radio (5.4%), Internet (4.5%) and Outdoor (3.5%). So who to believe? I think broadcast, cable and Internet services like Hulu will far exceed all other advertising.