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ZenithOptimedia forecasts global ad expenditure growing by 4.7% in 2016

India is seen as the new hot-spot among Asian and BRIC advertising markets. In 2018 mobile advertising will overtake desktop and account for 50.2% of all internet advertising

BestMediaInfo Bureau | Delhi | December 7, 2015

zenithOptimedia-logoZenithOptimedia’s new Advertising Expenditure Forecastspredicts global ad expenditure will grow 4.7% in 2016, reaching US$579 billion by the end of the year. This will be a 0.8 percentage point improvement on 2015. 2016 is a ‘quadrennial’ year, when ad expenditure is boosted by the Summer Olympics, the US presidential election and the UEFA football championship in Europe. The global ad market has enjoyed stable growth since 2011, with growth rates ranging between 4% and 5% a year, and ZO expects this pace to be maintained for the rest of the forecast period.

“Growth of the global ad market is being driven by advances in technology, especially mobile and programmatic tech,” said Steve King, ZenithOptimedia’s CEO Worldwide. “But television remains by far the most important channel for brand communication, and online video, its digital offshoot, is increasing the audiovisual share of global display advertising.”

Television is currently the dominant advertising medium, with a 38% share of total adspend in 2015. In 2018, however, internet is expected to overtake television to become the largest single advertising medium. However, one of the reasons for television’s loss of share is the rapid growth of paid search, which is essentially a direct response channel (together with classified), while television is the pre-eminent brand awareness channel – and is expected to remain so for many years to come.

Audio-visual advertising as a whole – television plus online video – is gaining share of display advertising. Television offers unparalleled capacity to build reach, while online video offers pinpoint targeting and personalisation of marketing messages. Both are powerful tools for establishing brand awareness and associations. The study estimates that audio-visual advertising will account for a record 48.4% of display advertising in 2015, up from 44.1% in 2010, and expects its share to reach 48.9% in 2018.

Mobile is the driver

In 2018 mobile advertising will overtake desktop and account for 50.2% of all internet advertising. Mobile advertising will total US$114bn in 2018, up from US$50bn in 2015, and will be larger than all other media except for television (which will total US$215bn, up from US$206bn in 2015).

Mobile advertising is responsible for almost all of the growth in global ad spend. We forecast it to grow at an average rate of 32% a year between 2015 and 2018, and to contribute 87% of all of the new ad dollars added to the global market during these years.

Programmatic advertising will account for more than half of digital display advertising (53%) for the first time this year, and will increase its share to 60% in 2016. The study expects programmatic advertising to grow another 34% in 2016 and 26% in 2017, at which point two-thirds of global display will be programmatic.

Asian heavyweights; India is a hot-spot

At region-wise level, Fast-track Asia (China, India, Indonesia, Malaysia, Pakistan, the Philippines, Taiwan, Thailand and Vietnam) economies are growing extremely rapidly as they adopt Western technology and practices, while benefiting from the rapid inflow of funds from investors hoping to tap into this growth. China accounts for 74% of adspend in Fast-track Asia, so its slowdown naturally has a large effect on the region as a whole. The study expects ad expenditure in Fast-track Asia to grow 8.9% in 2015, and at an average rate of 8.4% a year between 2015 and 2018, down from 14.7% a year between 2009 and 2014.

Adspend growth is slowing down in three out of the four BRIC markets that were responsible for much of last decade’s ad market expansion. Between 2005 and 2010 ad spend grew at an average rate of 10.7% a year in Brazil, 10.3% in Russia and 16.9% in China. Brazil and Russia are now in recession, and China is slowing down, and between 2015 and 2018 we expect annual growth to slow to 3.5% in Brazil, 5.3% in Russia and 7.5% in China. Russia and China will continue to beat the global adspend growth rate, however.

India is the only BRIC market that continues to combine rapid growth and large scale, making it a distinct hot-spot of adspend growth. The market is benefiting from sustained, healthy economic growth and strengthening personal consumption. With adspends growing at double-digit annual rates here, the market is expected to expand by US$3 billion between 2015 and 2018.

Anupriya Acharya, Group CEO, ZenithOptimedia India, said, “It’s been over 18 months of the new government led by Prime Minister NarendraModi. Last year this time it had captured the collective consciousness of the country and we entered 2015 with a strongly positive consumer and business sentiment. This irrational exuberance has tempered down to a more rational optimism and all the current economic and sentiment indicators suggest that the forward view remains positive. Our growth forecast for India adexpenditures for 2016 holds at 13%. TV largely fuels this at 15% and Print (newspapers) at 10%. Digital is expected to grow upwards of 20% while all other media are expected to grow at 5-10%. E-commerce, telecom, mobile phones are expected to have the maximum growth followed by automobiles and FMCGs.”

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