Digital Ad Spending Expected to Soon Surpass TV
Television has lost its longtime grip on advertising budgets as digital ad spending continues to surge, according to some of the advertising industry’s most closely watched forecasts to be released on Monday. Television ad sales are expected to fall slightly this year, decreasing globally for the first time ever aside from a recession year, according to the Interpublic Group’s Magna Global.
TV will account for 38.4 percent of the $503 billion global ad market this year and will drop to 38 percent of the market in 2016, according to the forecast.
Television has lost its longtime grip on advertising budgets as digital ad spending continues to surge, according to some of the advertising industry’s most closely watched forecasts to be released on Monday. Television ad sales are expected to fall slightly this year, decreasing globally for the first time ever aside from a recession year, according to the Interpublic Group’s Magna Global.
TV will account for 38.4 percent of the $503 billion global ad market this year and will drop to 38 percent of the market in 2016, according to the forecast.
In the meantime, digital media will continue its meteoric rise. Digital ad spending will grow 17.2 percent this year, to nearly $160 billion, and 13.5 percent in 2016, and is expected to overtake TV as the biggest advertising category by the end of 2017, the forecast says. Publicis Groupe’s ZenithOptimedia expects digital media to pass TV in 2018. “TV global growth is diminishing,” Vincent Letang, the head of global forecasting at Magna Global, said. “In most major developed markets, TV growth is slowing and in some cases stagnating.”
The annual advertising forecasts are likely to be closely watched by media executives and those on Wall Street after a year marked by volatility in top media stocks. The predictions could intensify brewing anxiety about the fate of traditional media in an increasingly digital world, with the unstable advertising market compounding fears of cord-cutting and declining TV ratings.
The companies plan to present their forecasts at the UBS Global Media and Communications Conference in New York on Monday.
In the United States, Magna Global predicts, digital media will overtake TV as the No. 1 advertising category in 2016, with nearly $68 billion in ad sales compared with $66 billion for TV.
The prospect that online and mobile platforms would capture more ad dollars than TV became inevitable in the last several years. Until recently, advertisers were dipping into their print budgets to feed their digital ad purchases. But ad dollars are now flowing from TV to digital, said Jonathan Barnard, the head of forecasting for ZenithOptimedia.
“Over the last year or so, that’s really been the first time we’ve seen money specifically coming out of TV and going onto digital,” he said. “We’ve been hearing about the loss of revenue from TV to digital for a long time, but the last year has been when it’s been fairly visible.”
In particular, ad dollars are now flowing faster into online video, social media and mobile. ZenithOptimedia predicts mobile ads will account for 50.2 percent of Internet advertising in 2018, surpassing desktop ads for the first time.
That shift in ad dollars to online and mobile has led to what Mr. Letang of Magna Global calls “digital deflation”: those ads are typically cheaper, and as ad dollars move to digital, there is pressure on media sellers to cut their ad prices. As a result, growth in the overall ad spending market is slowing.
Magna Global estimates that ad sales in the United States will increase 5.2 percent in 2016, to $176 billion. But when ads for nonannual events like the Summer Olympics and presidential elections are stripped out, the pace of growth in ad sales will slow to 3.3 percent in 2016 from 3.8 percent this year.
Over all, Magna Global predicts that global ad spending will grow by 4.6 percent, to $526 billion in 2016, and ZenithOptimedia sees an increase of 4.7 percent, to $579 billion. WPP’s GroupM cut its growth estimate to 4.5 percent, from 4.8 percent, to $520 billion.
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The annual advertising forecasts are likely to be closely watched by media executives and those on Wall Street after a year marked by volatility in top media stocks. The predictions could intensify brewing anxiety about the fate of traditional media in an increasingly digital world, with the unstable advertising market compounding fears of cord-cutting and declining TV ratings.
The companies plan to present their forecasts at the UBS Global Media and Communications Conference in New York on Monday.
In the United States, Magna Global predicts, digital media will overtake TV as the No. 1 advertising category in 2016, with nearly $68 billion in ad sales compared with $66 billion for TV.
The prospect that online and mobile platforms would capture more ad dollars than TV became inevitable in the last several years. Until recently, advertisers were dipping into their print budgets to feed their digital ad purchases. But ad dollars are now flowing from TV to digital, said Jonathan Barnard, the head of forecasting for ZenithOptimedia.
“Over the last year or so, that’s really been the first time we’ve seen money specifically coming out of TV and going onto digital,” he said. “We’ve been hearing about the loss of revenue from TV to digital for a long time, but the last year has been when it’s been fairly visible.”
In particular, ad dollars are now flowing faster into online video, social media and mobile. ZenithOptimedia predicts mobile ads will account for 50.2 percent of Internet advertising in 2018, surpassing desktop ads for the first time.
That shift in ad dollars to online and mobile has led to what Mr. Letang of Magna Global calls “digital deflation”: those ads are typically cheaper, and as ad dollars move to digital, there is pressure on media sellers to cut their ad prices. As a result, growth in the overall ad spending market is slowing.
Magna Global estimates that ad sales in the United States will increase 5.2 percent in 2016, to $176 billion. But when ads for nonannual events like the Summer Olympics and presidential elections are stripped out, the pace of growth in ad sales will slow to 3.3 percent in 2016 from 3.8 percent this year.
Over all, Magna Global predicts that global ad spending will grow by 4.6 percent, to $526 billion in 2016, and ZenithOptimedia sees an increase of 4.7 percent, to $579 billion. WPP’s GroupM cut its growth estimate to 4.5 percent, from 4.8 percent, to $520 billion.
Local Markets and Sales Opportunities - 4 Local Media
So what does all of this mean to Independent Media Brokers selling targeted digital media solutions? It means that local business owners are more open than ever to consider new options and specifically targeted digital media solutions. Where do we come in? Simple. We use utilizing our unique sales approach and set new business appointments with local business owners. The four most profitable verticals to target are: Automotive Dealerships, Medical Businesses, Financial Companies and Home Services such as roofing, siding, window and high end home remodeling businesses.
Never before in the history of the advertising industry, has an independent sales consultant been able to offer targeted advertising solutions and take clients away from TV, Radio and Print companies. Use the 4 Local Media sales process to generate 10-15-20 new clients in 2016 and enjoy the wealth and time freedom of being a successful business owner. Never again work for someone else, now is the time to take back your freedom and generate a secure income for yourself and your family!
Damon Balch
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