ZenithOptimedia downgrades global ad forecast

Twitter: has restructured operations for mobile consumption and advertising
Twitter: has restructured operations for mobile consumption and advertising

The rise of programmatic, mobile and social media advertising fuels growth in spend

Global adspend is to grow by 4.9 percent in 2015, down from 5.3 percent in September, and by 6 percent in 2016.

The ZenithOptimedia Advertising Expenditure Forecasts – out today – predicts this growth will be fueled by the rise in mobile advertising and social media, and digital display moving towards programmatic buying.

The report said its downward revision for 2015, "Indicates a minor but widespread decline in advertiser confidence, related to conflict in Ukraine and weak economic growth at the heart of the Eurozone."

Global adspend is expected to grow by 4.9 percent to reach $545 billion in 2015. ZenithOptimedia forecasts U.K. adspend, meanwhile, will grow by 6 per cent in 2015.

Even though the global economy is expected to improve next year the forecast growth is slightly below 2014’s 5.1 percent. This is partly due to the absence of big events like this year’s Winter Olympics, the World Cup and U.S. mid-term elections.

Global events in 2016, including the Summer Olympics, the U.S. presidential elections and the UEFA European Football Championship, are expected to propel adspend to 5.6 percent growth that year. Again, it will slip back to 5.2 percent in 2017 in their absence.

Mobile fueling growth

Mobile is the main driver of global adspend growth. It is forecast to account for 51 percent of all new advertising dollars between 2014 and 2017, and will grow by an average of 38 percent each year. This is driven by the spread of devices and innovations in ad technology.

But mobile’s share of adspend remains behind its share of media consumption. It will only account for 6.2 percent of all adspend in the U.S. this year, while eMarketer estimates it will occupy 23.3 percent of media consumption time.

This is partly because convention display advertising often does not work well on mobile, and mobiles do not accept cookies, making retargeting and tracking from the ad to the purchase tricky.

Facebook and Twitter, however, have restructured their operations for mobile consumption and advertising, and between them are on track to capture 33 percent of all mobile adspend in 2014. This is well above their 10 percent share of all digital adspend.

Geographical differences

There are also wide geographic variations on adspend growth, with the global growth being restrained by weakness in Japan and the Eurozone.

Japan’s economic problems are limiting its ad market to 2 to 3 per cent annual growth.

The Eurozone is improving – 2014 will be its first year of growth since 2010. Adspend across the Eurozone fell by 15 percent between 2007 and 2013. The worst hit markets – Greece, Portugal, Spain and Ireland – lost 49 percent of their adspend over this period. In contrast, France and Germany only shrunk by 3 percent.

But these four worst-hit countries are expected to make a recovery over the next three years, and substantially outperform the Eurozone average.

ZenithOptimedia’s Advertising Expenditure Forecasts report contains forecasts of advertising expenditure by medium for 80 countries.

This article first appeared on campaignlive.co.uk.

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