Mobile on curve to become world’s fourth largest advertising medium

7 Apr 20142 Shares

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Mobile advertising is growing six times faster than conventional desktop advertising and by 2016 is forecast to represent 28pc of internet expenditure and will leapfrog radio, magazines and outdoor to become the world’s fourth-largest medium.

Advertising will continue to strengthen over the next three years, with global advertising spend growth forecast to rise from 3.9pc in 2013 to 5.5pc in 2014. Growth is then set to increase to 5.8pc in 2015 and 6.1pc in 2016. This growth will be driven by improvement in the global economy, the spread of programmatic buying, and the rapid rise of mobile advertising.

According to ZenithOptimedia’s new Advertising Expenditure Forecasts, global ad spend will be boosted this year by the three ‘semi-quadrennial’ events – the Winter Olympics, the football World Cup, and the mid-term elections in the US – which will benefit television in particular.

Growing confidence

Advertisers are also gaining in confidence as growth returns to the Eurozone, which now looks more stable and less likely to deliver more negative shocks to the world economy.

This has encouraged advertisers to start to commit higher budgets to the region, which has suffered a 15pc drop in ad spend since the financial crisis began in 2007. Eurozone ad spend shrank 3.0pc in 2013, but this was loaded towards the front of the year; by the end of the year several key media owners were reporting growth in their ad revenues.

ZenithOptimedia forecasts Eurozone ad spend to grow 0.7pc 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 accelerate to 1.6pc growth in 2015 and 1.7pc in 2016.

“Advertisers are gaining in confidence as the world economy returns to stable growth. They will find plenty of opportunities to generate strong returns on their advertising investment in the fast-growing digital media, but should remember that television has lost none of its power to reach large and engaged audiences,” said Steve King, ZenithOptimedia’s CEO, Worldwide.

Television is still by some distance the dominant advertising medium, attracting 40pc of spend in 2013, nearly twice that taken by the internet (21pc). TV offers unparallelled capacity to build reach, and establish brand awareness and associations.

“We forecast television ad spend to grow 5.2pc in 2014, up from 4.4pc in 2013, as it gains the most of the benefits of the Winter Olympics, football World Cup and mid-term US elections,” King said.

Programmatic buying to boost internet display above search

The internet is still the fastest-growing medium by some distance. It grew 16.2pc in 2013, and is forecast for an average of 16pc annual growth for 2014 to 2016.

The fastest-growing sub-category is display, which is forecast to grow at 21pc a year to 2016. Traditional display (banners and other standard formats) is growing at 16pc a year, boosted by the revolution in programmatic buying, which provides agencies and advertisers with more control and better value from their trading.

Social media (growing at 29pc a year) and online video (23pc a year) are also starting to benefit from programmatic buying, which is helping to sustain their rapid growth.

“We expect internet display to overtake paid search (which is growing at 13pc a year) for the first time in 2015. In 2016, we expect internet display ad spend to total US$74.4bn, while paid search ad spend totals US$71.1bn.”

Mobile on a upward growth curve

According to ZenithOptimedia, mobile advertising has now truly taken off and is growing six times faster than desktop internet.

“We forecast mobile advertising to grow by an average of 50pc a year between 2013 and 2016, driven by the rapid adoption of smartphones and tablets. By contrast we forecast desktop internet advertising to grow at an average of 8pc a year.

“We estimate global expenditure on mobile advertising was US$13.4bn in 2013, representing 12.9pc of internet expenditure and 2.7pc of advertising across all media. By 2016 we forecast this to rise to US$45.0bn, representing 28.0pc of internet expenditure and 7.6pc of all expenditure.

“This means mobile will leapfrog radio, magazines and outdoor to become the world’s fourth-largest medium by the end of our forecast period.”

Social marketing image via Shutterstock

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com