Global Display Ad Spend Growth Forecast to Outpace Paid Search

June 19, 2012

zenithoptimedia-global-online-ad-spend-2010-2014-june2012.pngRapid growth in social media and online video advertising is driving increases in the global display advertising market, which is forecast to rise by 20% annually from 2011 through 2014, according to a June 2012 forecast from ZenithOptimedia. The forecast calls for display advertising to account for 40% of global internet advertising in 2014 (or US $47.75 billion), up from 36% in 2011. And while paid search will still account for the largest proportion of online ad spending in 2014, at roughly 48.2%, that will be a small drop from 49.7% in 2011, due to slightly more muted annual growth of 15%. Overall, online advertising is expected to grow on average by 16% a year between 2011 and 2014, with classifieds posting the slowest annual growth of the major sub-categories, of 8%.

Social Media Spend to See Substantial Growth

The report estimates that social media advertising accounted for 14.4% of global online display advertising in 2011, or $3.94 billion. This figures only includes paid-for ads appearing within social media sites, and does not include non-paid activity by advertisers, such as brand pages and promotions.

ZenithOptimedia expects this social media advertising figure to grow at an annual rate of 31% over the next 3 years, eventually accounting for 18.5% share of the global display ad market. According to a May forecast from BIA/Kelsey, US social media advertising revenues will increase from $3.8 billion in 2011 to $4.8 billion this year, and then more than double to $9.8 billion in 2016.

Total Global Growth Revised Downwards

ZenithOptimedia expects total global advertising spend to grow 4.3% to reach $502 billion USD this year, a downgrade from the 4.8% forecast made in March. By comparison, a separate forecast issued by Warc [pdf] this month predicts global advertising spend this year to rise 4.8%.

Looking at spending by media, ZenithOptimedia expects global spending in two major ad media, TV and the internet, to grow significantly between this year and 2014. TV ad spend is expected to hit $200.8 billion this year and increase 11.65% to $224.2 billion in 2014. With online advertising growing at roughly 16% a year, the medium will reach $119.4 billion in spend by 2014.

Ad spend in radio, cinema, and outdoor is expected to grow at a smaller rate, while expenditures for newspapers and magazines should moderately decline.

Online to Gain Share at Traditional Media Expense

The share of global ad spending represented by TV is expected to inch up to 40.4% this year and hold steady through 2014, while global cinema advertising will remain at 0.5% share through the period. The share of expenditures held by online advertising, predicted to reach 17.8% this year from 16% in 2011, is forecast to rise to 21.5% in 2014.

All other advertising media will see a decline in spend share. Radio is projected to drop from 7.1% share in 2011 to 7% share this year and 6.6% in 2014. Outdoor will see a relatively more muted decline, from 6.6% in 2011 to 6.5% this year and 6.3% in 2014. Print media will see the largest drop-offs: the share of global ad spend represented by newspapers is forecast to fall from 20.2% in 2011 to 16.7% in 2014, while the share held by magazines will drop from 9.4% last year to 7.9% at the end of the forecast period.

Developing Markets Driving Growth

Between 2011 and 2014, ZenithOptimedia predicts that 60% of the world’s growth in ad spending will come from developing markets (defined as outside North America, Western Europe, and Japan). In fact, 50% will come from just 10 markets, with the BRIC (Brazil, Russia, India, and China) accounting for 35% alone. China will dominate ad spend growth in the developing markets, at $16.46 billion. Even so, the US will remain the dominant ad market in 2014, with Japan and China following. Russia’s growth will propel it into the top 10, ahead of South Korea.

According to the Warc forecast, China’s ad market will grow by 11.3% in real terms this year (constant price forecasts take into account predicted inflation), while Russia’s will grow by 8.2%.

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