Spending on Digital Ads to Overtake TV in 2017

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Magna Global also predicts the strongest U.S. ad growth rate in a decade for 2015

Digital advertising spending will exceed TV ad spending in the U.S. in 2017, Magna Global said in its latest forecast Tuesday. That would be about a year earlier than the firm previously projected.

The company also now forecasts the biggest U.S. ad gain in a decade for 2015, after raising its projections for the year.

Magna Global said U.S. digital ad revenue would reach $72.0 billion in 2017, compared with TV ad spending of $70.5 billion. Last year, digital accounted for $43 billion, with Magna forecasting it will reach the $50 million mark this year. 

Earlier this year, the company had said that with an ad market share of 27 percent in 2013, digital was already bigger than national TV in the U.S. But including local markets, TV advertising reached a share of 40 percent.

Magna at the time said that it expects digital media ad spending to overtake TV by 2018. Its forecast back then called for digital to grow to $74 billion in 2018, about the same figure as TV.

By comparison, digital media advertising is already bigger than total TV spending in such countries as the U.K., Australia, Germany and the Netherlands. The fact that digital isn't the biggest ad category in the U.S. "shows the strength and resilience of television in the U.S. compared to other advanced ad markets despite the current plateau in viewing," Magna said.

The prognosticator on Tuesday also forecasted that U.S. ad revenue for core media will rise 5.1 percent this year to $167 billion, down from its previous expectation of 6 percent. It cited weaker-than-predicted Olympics and political ad revenue during the first half of the year and a softer second-quarter TV ad market, as recently reported by major entertainment conglomerates

"Television was among the media categories most affected by the second-quarter slowdown, with local TV revenues flat year-over-year and English networks ad sales heavily down," Magna said. However, it predicted that "the second-quarter softness was mostly circumstantial, and stronger advertising spending growth should resume" in the back half of the year.

For 2015, Magna forecasted 3.3 percent ad growth, up from 2.4 percent previously amid a stronger economic outlook. "This level of growth will be the highest in 10 years, bringing the U.S. ad market to a new all-time high of $172 billion," compared to the previous high of $169 billion set in 2007, Magna said.

Email: Georg.Szalai@THR.com
Twitter: @georgszalai