World Cup to Add $1.5 Billion to Global Ad Spend
The global advertising market is already the big winner of this year's soccer World Cup as increased spending around the tournament boosts global ad budgets.
Multiple forecasts put global growth at between 5 and 6 percent for this year, a good portion of it thanks to the Cup, the world's largest sporting event.
ZenithOptimedia has calculated the World Cup effect at $1.5 billion globally for this year, with the bulk of the ad spend going to television and online.
With Brazil hosting this year's tournament, that global spend is most concentrated in soccer-mad Latin America, where ZenithOptimedia expects as much as $500 million in additional spending tied to the World Cup. But even in North America, where soccer is farther down the list of top sports, the firm expects an extra $300 million in ad spending, similar to the boost forecast for Western Europe.
The figures for the Asian Pacific are somewhat lower, at an additional $250 million, due to the disadvantageous time differences between match kickoff in Brazil and local broadcast times in the region. The remaining $150 million in additional spend is set to come from Central and Eastern Europe, the Middle East and North Africa and the rest of the world.
Magna Global's most recent study of global ad revenues, published this week, forecasts total growth of 6.4 percent to $516 billion in 2014. The World Cup and this year's Winter Olympics will be the strongest drivers of growth in television advertising, according to Magna, boosting spend in that area by 7.2 percent compared to 2.7 percent growth in 2013. Magna sees the greatest impact in the World Cup's host country, forecasting a 15.8 percent jump in TV spend for Brazil this year despite tepid economic growth overall (forecast at 1.8 percent in real GDP terms).
"We assume the World Cup will be too big of an opportunity for advertisers to miss, and the event might deliver a feel-good effect that will, at least temporarily, alleviate economic difficulties (in Brazil)," Magna said in its report.
In North America, the Cup will mean a "significant" boost to the Hispanic television sector, Magna says, but only a modest one for the entire market. Bigger drivers of ad growth for the U.S. are spending around November's midterm elections, followed by the Winter Olympics. Overall, Magna is predicting U.S. ad growth of 6 percent to $168 billion.
Traditional television will reap most of the benefits of the World Cup ad bump but Internet ads are taking an increasingly large share of the pie, and not just surrounding the tournament. ZenithOptimedia expects television's share of the total global ad market to erode to 39.4 percent in 2014 and to 38.3 percent in 2016 as it is outpaced by the boom in online advertising, which the group forecasts will grow 16.2 percent per year.
Referring to advertising surrounding the World Cup, ZenithOptimedia's worldwide CEO Steve King said: "While television will remain central to how fans experience the competition, advertisers are using digital media more than ever before to help shape this experience. Over the next few years Internet advertising will play an even greater role in supplementing the brand‐building power of television."