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Internet to be biggest ad medium in 12 key markets by 2017: ZenithOptimedia
MUMBAI: Internet will be the biggest advertising medium in 12 key markets in 2017, representing 28 per cent of the global ad spend, according ZenithOptimedia’s new advertising expenditure forecast.
In four of these markets, internet advertising will attract more than half of total ad spend. Globally, the internet will remain in second place, behind television, though the gap between the market shares of the two media will shrink from 11 percentage points this year to just four in 2017.
The internet was already the dominant medium in seven markets last year – Australia, Canada, Denmark, Netherlands, Norway, Sweden and the UK – and by 2017 will dominate another five – China, Finland, Germany, Ireland and New Zealand. The internet’s market share will exceed 50 per cent in the UK this year, in Denmark and Sweden next year, and in China in 2017.
Mobile is driving growth in internet market share and global ad spend
The main driver of internet growth is mobile advertising. Between 2014 and 2017 the agency forecast that mobile will more than double its share of global ad spend, from 5.1 per cent to 12.9 per cent. Desktop internet’s share will remain stable, changing from 19.3 per cent in 2014 to 19.4 per cent in 2017, while every other medium will lose share to mobile. Mobile is also the driving force behind the growth of the whole market, and will contribute 70 per cent of all global adspend growth between 2014 and 2017.
Global ad spend to grow by 4.2% in 2015
ZenithOptimedia forecasts that global ad spend will grow 4.2 per cent to reach $531 billion in 2015, and will accelerate to five per cent growth in 2016, boosted by the 2016 Summer Olympics in Rio and the US Presidential elections. Ad spend will then slow down slightly in the absence of these events, growing 4.3 per cent in 2017.
The agency has reduced the forecasts for ad spend growth in 2015 and 2016 fractionally, by 0.2 and 0.3 percentage points respectively. This is partly due to the strength of the US dollar against the currencies of many faster-growing markets, which reduces their contribution to the global total, and partly due to a weakening in Latin America.
Latin America remains key driver of ad growth despite slowdown
Latin America has been restrained by low prices for oil and other export commodities, and the weakness of the economy in Brazil, which shrank by 1.6 per cent year-on-year in the first quarter. It has reduced forecasts for growth in Latin American ad spend by three percentage points in 2015, from 11.4 per cent to 8.4 per cent.
For the full forecast period, between 2014 and 2017, it have scaled back the agency’s forecasts for Latin America’s growth from 12 per cent a year to 6.9 per cent a year. Latin America remains one of the world’s fastest growing regions, and a key driver of global ad spend growth. ZenithOptimedia still expect double-digit annual growth rates from Argentina, Uruguay and Venezuela, with Costa Rica, Mexico and Panama close behind, growing at eight-nine per cent a year between 2014 and 2017.
Fastest growth coming from fast-track Asian markets
The fastest growth in ad spend is coming from ‘Fast-track Asia’, which includes China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam. Their economies are growing extremely rapidly as they adopt best business practices and technology, while benefiting from the rapid inflow of funds from investors. This region is the main engine of global adspend growth, and ZenithOptimedia forecasts it to expand by 9.1 per cent a year between 2014 and 2017. The star performers are India, Indonesia, the Philippines and Vietnam, each of which we forecast to grow at double-digit rates over this period.
Eurozone continues to strengthen, though risks remain
The eurozone economy has strengthened over the past few months, thanks mainly to low oil prices and the European Central Bank’s quantitative easing programme. The eurozone is a big net importer of oil, and the drop in oil prices has acted like a tax cut for consumers, who have spent their savings elsewhere. The economic stimulus has fed through to the ad market, which the agency now forecasts to grow two per cent this year, up from our previous forecast of 1.6 per cent.
Not all eurozone markets are in recovery yet, though most are moving in the right direction. The agency forecasts a 0.3 per cent decline in Finland this year, followed by 1.6 per cent growth in 2016. For France, the agency forecasts a 0.4 per cent decline this year and a 0.1 per cent decline next year.
ZenithOptimedia CEO Worldwide Steve King said, “The internet is quickly establishing itself as the dominant advertising medium, and on current trends will overtake television by the end of the decade. However, this refers only to traditional television viewed on TV sets. The amount of time viewers spend watching online video on their laptops, tablets and smartphones is increasing rapidly, and advertisers are shifting their budgets online to follow them. The spread of internet devices and new advertising technology will give advertisers new opportunities to communicate with and learn from consumers, and to do so more effectively than ever before.”