Dubai
Sports and politics will form a heady mix for the global ad industry this year.
Ad spend will track a higher growth path on the back of three events, two global in nature, and the third localised. ‘Global ad spend will be boosted this year by the three ‘semi-quadrennial’ events — the (recently concluded Sochi) Winter Olympics, the football World Cup (in Brazil), and the mid-term elections in the US — which will benefit television in particular’, according to the ‘Advertising Expenditure Forecasts’ just released by the media agency ZenithOptimedia.
The firm predicts global ad expenditure growing 5.5 per cent in 2014 to $537 billion. This is 0.2 per cent higher than was initially forecast in December last, and indicates the stronger growth signals emanating from the Americas and the Asia-Pacific.
‘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. In general, advertisers are in a strong position to invest in expansion, with large reserves of cash and high profitability.
‘Advertising will continue to strengthen over the next three years, with global advertising spend growth forecast to rise from 3.9 per cent in 2013 to 5.5 per cent in 2014. Growth is then set to increase to 5.8 per cent in 2015 and 6.1 per cent 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’.
The upbeat tone extends to the Middle East as well — ‘Confidence and activity began to recover in 2013, when ad spend grew 4.7 per cent. We forecast robust 7.1 per cent growth in 2014, falling back to a more muted 4 to 5 per cent annual growth in 2015 and 2016’, the report said. The 14.9 per cent decline of 2011 is distant history now.
At the global level, the feel-good factor is very much in advertisers’ mind. “Advertisers are gaining in confidence as the world economy returns to stable growth,” said Steve King, ZenithOptimedia’s CEO, Worldwide. “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.”
As for what the medium-term might offer, ZentihOptimedia reckons that China will take over the number two spot from Japan in the rankings for Top 10 contributors to ad spend growth between 2013-16.
‘Despite the rapid growth of the rising markets, the US is still the biggest contributor of new ad dollars to the global market’, the agency said. ‘Between 2013 and 2016 we expect the US to contribute 26 per cent of the $94 billion that will be added to global ad spend.
‘After the US, however, the biggest contributors are much younger and more dynamic. China comes second, accounting for 17 per cent of additional ad dollars over this period, followed by Argentina and Indonesia, accounting for 7 per cent each.
‘In 2013 France ranked eighth among the world’s markets and Canada ranked ninth. By 2016 we expect France to have fallen to tenth and Canada to eleventh. Canada will be pushed out of the top ten by Indonesia, which we forecast to rise from thirteenth to eighth over the same period. Meanwhile South Korea will rise from tenth to ninth’.
