Commentary

US Largest Digital & Alternative Market As Worldwide A&M Exceeds $1 Trillion

According to PQ Media, Global digital & alternative (D&A) media revenues increased 11.9% in 2013, accounting for 24.2% of the $1.007 trillion dollar advertising & marketing Global ecosystem, which posted a 3.4% gain during the year.

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Traditional advertising & marketing, meanwhile, inched up 0.8% in 2013. The growth rates for D&A media, as well as overall and traditional advertising & marketing represented a deceleration from 2012 as the fastest-growing BRIC markets faced weakening economies due to debt issues and soft energy prices.

The Global D&A Media Revenue Forecast 2014-18 is the first of three reports in the PQ Media Research Series, analyzing the rapidly shifting media ecosystem.

Global Digital & Alternative Media Revenues (US$ Millions)

 

 

CAGR

CAGR

Media Sector

2013

2008-13

2014

2018

2013-18

Digital & Alternative Advertising

 

 

 

 

 

   Revenues ($ Millions)

$102,631

 

 

 

 

   Y-to-Y Growth

15.6%

14.8%

16.9%

 

17.0%

   % Share

40.7%

 

 

 

 

Digital & Alternative Marketing

 

 

 

 

 

   Revenues ($ Millions)

$149,516

 

 

 

 

   Y-to-Y Growth

10.0%

9.9%

11.5%

 

12.1% %

   Share

59.3%

 

 

 

 

Total Digital & Alternative Media

 

 

 

 

 

   Revenues ($ Millions)

$252,147

 

 

$489,759

 

   Y-to-Y Growth

11.9%

11.8%

13.7%

 

12.4%

Source: PQ Media, September 2014

Despite the growth deceleration in 2013, D&A media was fueled by soaring growth in mobile media channels, and double-digit gains in other digital & alternative media platforms including internet advertising, paid product placement, and word-of-mouth marketing. A number of major brands are shifting budgets to mobile search as tablet penetration rises significantly, while PC household penetration begins to fall.

  • Global D&A advertising revenues grew 15.6% in 2012, as internet advertising was the largest global ad platform and mobile ads posted the fastest growth, says the report
  • D&A marketing revenues climbed 12% to $136.37 billion in 2012, with online marketing replacing consumer events as the largest marketing platform, and mobile marketing producing the fastest growth rate.
  • Online search was the largest of the 40 global D&A media channels analyzed, reaching $45.18 billion in 2012, while mobile coupons posted the fastest growth during the year, soaring 115.2%
  • Global D&A advertising revenues rose 14.7% to $102.63 billion in 2013, as the mobile and internet advertising platforms posted the fastest growth according to the report
  • Global D&A marketing increased 10% to $149.52 billion, propelled by strong gains in mobile marketing, product placement and word-of-mouth marketing
  • The largest D&A media platform in 2013 was internet advertising which reached $73.38 billion worldwide, while mobile marketing was the fastest-growing of the nine D&A media platforms, skyrocketing at a 70.4% rate during the year

In the US Market, media revenues increased 12.6% in 2013 to $103.02 billion, continuing to be the world’s largest digital media market. D&A media comprised 26.5% of all US advertising & marketing revenues, up from only 15.6% in 2008.

The D&A advertising sector grew 16.5% in 2013, propelled by strong double-digit gains in all mobile advertising channels, such as mobile video, audio & rich media, while D&A marketing rose 10.7%, fueled by mobile marketing channels, like mobile search.

In comparison, US traditional media fell 1% in 2013, as print media continue to post declining growth, as well as the lack of even-year influxes of revenue for broadcast media, such as the Olympics and political advertising. Overall advertising & marketing rose 2.4% in 2013, reaching $376.29 billion, still below 2008 results.

United States Digital & Alternative Media Revenues(US$ Millions)

 

 

CAGR

CAGR

Media Sector

2013

2008-13

2014

2018

2013-18

Digital & Alternative Advertising

 

 

 

 

 

   Revenues ($ Millions)

$35,289

 

 

 

 

   Y-to-Y Growth

16.5%

13.7%

18.5%

 

17.9%

    % Share

34.2%

 

 

 

 

Digital & Alternative Marketing

 

 

 

 

 

   Revenues ($ Millions)

$67,733

 

 

 

 

   Y-to-Y Growth

10.7%

9.8

%12.1

 

%11.7%

   % Share

65.7%

 

 

 

 

Total Digital & Alternative Media

 

 

 

 

 

   Revenues ($ Millions)

$103,122

 

 

$199,899

 

   Y-to-Y Growth

12.6%

11.1%

14.3%

 

14.2%

Source: PQ Media, September 2014

D&A media revenue was on pace in the first half of 2014 to grow 14.3% for the full year, the strongest growth rate since the recession.

US media operators are projected to generate a 14.2% CAGR in D&A revenue during the 2013-18 period, while D&A ad revenues are forecast to climb 18.5% in 2014 and post a 17.9% CAGR over the next five years,

In comparison, traditional media is projected to rise 1.3% in 2014, and post a 1.5% CAGR to $293.81 billion in 2018, with gains attributed primarily to the influx of political campaign and Olympics advertising.

The US became the first global market to exceed $100 billion in D&A media operator revenue, reaching $103.00 billion in 2013, almost five times the size of second-ranked Japan. The UK had the highest D&A media share of its total media revenues in 2013 at 30.6%, followed by Japan and Canada and the US ranked seventh at a 26.5% share.

D&A media growth represented a growth deceleration as brands are not only shifting budgets away from print media to mobile platforms and channels, but also from emerging media like digital out-of-home and word-of-mouth marketing. Most noticeable, however, is the impact mobile is having on stalwart internet channels, such as search and displays, with brands preferring to reach key target audiences on tablets and smartphones rather than on personal computers.

  • Product placement continued to post double-digit growth across all media channels. Viral TV placements are becoming more common, such as Toyota’s on-the-field placement during pre-season NFL football games. Digital paid placements are appearing in YouTube videos, while companies are being formed to proactively target younger audiences online and through mobile devices.
  • Digital out-of-home media registered accelerating growth during the year, despite headwinds in the roadside billboard category. A court-ordered closure of all Los Angeles digital boards, coupled with slowing organic growth on existing digital signage, resulted in the first-ever single-digit growth rate for this category. Softer DBB results were offset by stronger categories, particularly digital place-based networks at point-of-care locations, amplified by rising number of screen locations, as more doctors and hospitals join leading operators to educate clients about the Affordable Care Act.
  • The concept of “native advertising” has impacting numerous D&A channels. Native advertising is content produced by brands that is related to and positioned near content from media content owners, publishers, and operators. With stressed newsrooms, it’s becoming more common for sponsored content, which is driving faster growth in digital online and mobile custom content channels, as well as product placement in other media
  • Word-of-mouth marketing continues to post strong growth, propelled by high engagement with sponsored mobile tweets and improving metrics for WoMM campaigns, with TV networks partnering with WoMM researchers to monitor next-day conversations among its viewers, or technology companies providing sentiment of digital buzz
  • Videogame advertising will generate accelerating growth in 2014 as upgrades to Xbox and PlayStation became available, followed by multiple new title releases in 2014. Many of the console games also have digital platforms, fueling growth in ad opportunities in online and mobile games

US Overall Advertising And Marketing Revenues (US$ Billions; Traditional + Digital)

Year

US A&M Revenues (US $Bil)

2008

$381

2013

$376

2018

$496

Source: PQ Media, September 2014

 

Global Overall Advertising & Marketing Revenues (US$ Billions; Traditional + Digital)

Year

Global A&M Revenues (US $Bil)

2008

$945

2013

$1,007

2018

$ 1,371

Source: PQ Media, September 2014

With austere measures and stimulus packages driving anticipated growth acceleration in many sluggish economies during the forecast period, as well as expected deeper broadband, smartphone, and tablet penetration, D&A media revenues are projected to rise at a 14.2% compound annual growth rate over the next five years to $489.76 billion in 2018. For perspective, traditional advertising & marketing will rise at a 3.2% CAGR, which will lead overall brand marketing to grow at a 6.4% compound annual rate, says the report.

Concluding, the report notes that D&A media will account for over one-third of global advertising & marketing revenues in 2018, with several markets meeting or exceeding 40% share, led by Australia. D&A advertising revenues will rise at 17% CAGR and D&A marketing will expand at a 12.1% CAGR through 2018. Brazil and Russia will be among the fastest growth markets during the forecast period as they each host two worldwide sporting events, including the Summer Olympics in Brazil in 2016 and the FIFA World Cup in Russia in 2018. The US will remain the largest D&A media market, just missing the $200 billion benchmark, while registering a CAGR slightly over 14%.

For additional information, and to access the complete report in PDF format, please visit PQ Media here.

 

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