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Global ad spend to return to pre-financial crisis peak

: Tuesday, April 08 - 2014 @ 11:29

Advertising will continue to strengthen over the next three years, with global advertising spend predicted to surge from 3.9 per cent in 2013 to 5.5 per cent in 2014. This is then set to increase to 5.8 per cent by 2015 and 6.1 per cent by 2016, mainly driven by improvements in the global economy, the spread of programmatic buying and the rapid rise of mobile advertising.

According to ZenithOptimedia’s Advertising Expenditure Forecasts, global ad spend will be boosted by three ‘semi-quadrennial’ events – the 2014 Winter Olympics, the 2014 FIFA World Cup and the mid-term elections in the US – which will benefit television, in particular. Advertisers are also gaining confidence, as growth returns to the Eurozone, which now looks more stable and less likely to deliver more negative shocks to the world economy. In general, advertisers are in a strong position to invest in expansion, with large reserves of cash and high profitability.

Eurozone returns to growth

The Eurozone emerged from recession last year and its recovery appears to be gathering pace. This has encouraged advertisers to start committing higher budgets to the region, which has suffered a 15 per cent drop in ad spend since the financial crisis began in 2007. The Eurozone’s ad spend shrank by three per cent in 2013, but this was loaded towards the front of the year; at the end of 2013, several key media owners were reporting growth in their ad revenues. The study suggests that the Eurozone’s ad spend will increase by 0.7 per cent this year, achieving its first year of growth since 2010. Finland, Italy and Greece are still shrinking, but should stabilise next year, helping the Eurozone to accelerate by 1.6 per cent by 2015 and 1.7 per cent by 2016.

 

Television remains dominant

Television is still, by some distance, the dominant advertising medium, attracting 40 per cent of spend in 2013, approximately twice more than the share enjoyed by the internet (21 per cent). TV offers unparalleled capacity to build reach and establish brand awareness and associations. Television ad spend is expected to grow by 5.2 per cent in 2014, up from 4.4 per cent in 2013, as it gains the most from the benefits of the 2014 Winter Olympics, the 2014 FIFA World Cup and mid-term US elections.

Programmatic buying to boost internet display by 2015

The internet is still the fastest-growing medium to some extent, as it grew by 16.2 per cent in 2013. The best-performing sub-category is display, which is estimated to grow at 21 per cent per year until 2016. Traditional display (banners and other standard formats) is rising at 16 per cent per year, boosted by the revolution in programmatic buying, which provides agencies and advertisers with more control and better value from their trading. Social media (developing at 29 per cent per year) and online video (growing at 23 per cent per year) are also starting to benefit from programmatic buying, which is helping to sustain their rapid growths. The report expects internet display to overtake paid search (which is increasing at 13 per cent every year) for the first time in 2015. In 2016, internet display ad spend will total $74.4 billion, while paid search ad spend will reach $71.1bn.

Continued growth of mobile

Mobile advertising has now truly taken off and is growing six times faster than desktop internet. The report reveals that mobile advertising will grow by an average of 50 per cent between 2013 and 2016, driven by the rapid adoption of smartphones and tablets. By contrast, desktop internet advertising will grow at an average of eight per cent per year.

 

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Tuesday, April 8- 2014 @ 11:29 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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