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The U.S. advertising market will see slightly weaker growth this year than previously expected, a major prognosticator said Monday.
U.S. ad spending will rise 3.4 percent in 2013, down from a June forecast of 3.5 percent, according to the latest advertising expenditure forecasts from media agency ZenithOptimedia.
That will followed by a 4.5 percent gain in 2014, unchanged from the June forecast, and 4.6 percent in 2015, also unchanged. Overall, this will bring U.S. ad spending from $161.24 billion in 2012 to $182.27 billion in 2015.
“This growth is being driven by the rapid expansion of mobile advertising, which we forecast to account for half of total growth in U.S. ad expenditure in 2013 and 2014 and two thirds in 2015,” said Zenith, which counts as mobile all Internet ads delivered to smartphones and tablets no matter what format they come in.
“After years of hype, mobile advertising has finally arrived,” said Tim Jones, CEO, North America, ZenithOptimedia. “Its importance will only grow over the next few years as advertisers and agencies get to grips with the opportunities it offers and improve its ability to measure and deliver return on investment.”
In one revision, Zenith now forecasts spot radio ad spending to climb 2 percent this year rather than the previously forecast 3 percent.
The company also said that TV remains the dominant advertising medium in the U.S., attracting 38.8 percent of total ad spending in 2012. “Television had an extremely strong year in 2012 as the Olympics and elections helped boost ad expenditure by 7.8 percent,” it said. “In their absence, we forecast relatively disappointing 2.9 percent growth in 2013.
But Zenith added: “Television will benefit from the Winter Olympics, soccer World Cup and midterm elections in 2014, when we forecast 3.8 percent growth in ad expenditure, followed by 2.5 percent growth in 2015.”
Meanwhile, the global advertising market’s growth remains steady ahead of an expected acceleration next year and beyond amid improving European economic trends, according to Zenith.
Worldwide ad spending continues to be on track to grow 3.5 percent this year to $503 billion, the same rate posted for last year when the quadrennial effect boosted momentum, it said Monday.
“This is the same growth rate we predicted in the second quarter this year — and this is the first quarter since the second quarter of 2012 when we have not downgraded our forecast for 2013 — underlining the stability we are now seeing in the global advertising market,” the firm said. “Expectations for this year have finally leveled after a long period of slow erosion by bad economic news.”
Zenith expects accelerating growth over the next two years — 5.1 percent in 2014 and 5.9 percent in 2015. It cited “the European economy, currently acting as a brake on global ad growth,” which will become healthier. The eurozone came out of an 18-month recession in the second quarter, with its economic growth expected to gather pace “gradually over the next couple of years,” Zenith said.
Eurozone ad spending declined 5.2 percent in 2012, with Zenith predicting a smaller 4.3 percent drop in 2013, followed by 0.7 percent growth in 2014 and a 1.9 percent gain in 2015.
Meanwhile, Zenith increased its forecast for ad growth in rising markets, such as China, India, Brazil and Russia, to 7.6 percent from the 7.0 percent it had forecast in June.
The firm said it expected a “limited impact of troubles in the Middle East” on regional ad spending. “After the recent violence, we have reduced our forecasts for Egypt this year from 3.9 percent growth to a 6.3 percent decline,” Zenith said. “This disruption has not spread to nearby ad markets, and we still forecast 4.8 percent growth for the Middle East and North Africa this year, down from our June forecast of 5.5 percent. The wider geopolitical problems sparked by the Syrian conflict have to date had no material effect on global ad spend.”
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