Global ad markets will grow 3.9% in 2013, according to the latest analysis from the media buying agency. Internet advertising will remain the fastest-growing medium this year, propelled by rapid rises in online video and social media ads.
ZO says global ad spend will reach $518 billion by the end of the year.
Their 3.9% forecast for ad expenditure growth this year is down slightly from the 4.1% they forecast in December, mainly because 2012 turned out better than expected, leaving tougher comparatives for 2013. In dollar terms, the forecast for 2013 is marginally ahead of their last forecast, by $430 million.
As has been the case since the start of the economic downturn in 2007, this growth will be led by Rising Markets, which they forecast to grow by 8.2% on average in 2013, while the Mature Markets grow by just 1.8%, weighed down by the eurozone crisis. Over the next two years, they expect growth to pick up in both Rising and Mature Markets, reaching 9.4% and 3.5% respectively in 2015.
ZO says Mature Markets are North America, Western Europe and Japan, and Rising Markets are everywhere else.
Internet advertising is supplying most of the growth in expenditure by medium, driven by technical innovations, such as better measurement of exposure to advertising, greater localization, and integration with mobile devices. They forecast internet advertising to grow by 14.4% in 2013, while traditional media will grow by 1.6%.
Display is the fastest growing medium within internet advertising, with annual growth of 20%. This is being driven by the rapid rise of online video and social media advertising, each of which is growing at about 30% per year. Continued innovation among the search engines – including richer product information and images within ads – is seeing a healthy rise in paid search. ZO predicts paid search to grow by 13% a year to 2015. Much of the growth in internet advertising is at the expense of print – they predict internet advertising will increase its share of the ad market from 18% in 2012 to 23.4% in 2015, while newspapers and magazines will continue to shrink at an average of 1% – 2% a year. ZO is forecasting that by 2015 online ad spend will overtake print.
When we look at growth by country, it is the Rising Markets that are outperforming the rest of the world. ZenithOptimedia predicts that Rising Markets will contribute 63% of growth between 2012 and 2015 and will increase their share of global ad spend from 34% to 38%.
The high growth markets are in Latin America, Fast-track Asia (China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam), Eastern Europe and Central Asia, which are well ahead of the rest of the world, with an average of between 10% and 11% growth a year expected between 2012-2015. Despite this rapid growth, the US is still the biggest contributor of new ad dollars to the global market. Between 2012-2015, ZO expects the US to contribute 28% of the $76 billion that will be added to global ad spend.
ZO predicts there will be some change among the top 10 advertising markets between 2012 and 2015. USA, Japan, China and Germany will remain in first to fourth positions, and Australia and South Korea will still stay in eighth and tenth positions, respectively. However, we forecast that the UK will fall from fifth to sixth position, France for seventh to ninth and Canada will fall out of the top ten altogether. Brazil is set to rise to fifth position and Russia will move from eleventh to seventh.
The consensus among economic forecasters is that the global economy will gradually build up speed over the next three years. The eurozone should start to pull out of recession towards the end of this year, which will help stimulate world trade. ZO’s forecasts for 2014 and 2015 are unchanged at 5.0% and 5.6% respectively.