Global adspend by medium: Internet to grow 16% by 2014

21/12/2011

The internet will be the biggest contributor of new ad dollars to the global market, accounting for 52.9% of the growth in total expenditure until 2014, according to new research. The data, from ZenithOptimedia, found paid search will take the largest share of online adspend during that period, contributing 25.6%, followed by display at 22.6%, with classified at a much lower 4.7%.

The internet continues to grow much faster than any other medium, at an average of 15.9% a year between 2011 and 2014.

By 2014, they forecast a greater piece of the total ad spend market share pie for Internet advertising, increasing to 21.2 percent.

Currently, there are four markets in which Internet advertising accounts for more than 25% of total spend: Denmark, Norway, Sweden, and the UK.

In 2014, Internet advertising as a portion of total spend will top 30 percent in Canada, Norway, Sweden, and the UK.

Display is the fastest-growing segment, growing by 18.9% a year, driven mainly by online video and social media.

Streaming video ads are burgeoning extremely quickly, thanks to the emergence of do-it-yourself tools that have allowed local advertisers to enter the market.

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In most developed markets, social media sites are near the top of the list of most-popular websites, and they are often way ahead of their rivals in time spent by users.

Other display publishers are developing new tools and formats to compete with social media sites. Paid search is growing by 15.7% a year, but its growth is being slightly restrained by the shift in search behaviour from desktop to mobile devices, where costs are currently lower.

Online classified is growing relatively slowly, by 9.2% a year, while employment and property markets remain weak in the biggest countries.

Overall, ZenithOptimedia predicts internet advertising will increase its share of the ad market from 15.9% in 2011 to 21.2% in 2014.

Internet advertising already accounts for more than 25% of total ad expenditure in four markets (Denmark, Norway, Sweden and the UK), and by 2014 we expect it to account for more than 30% in four markets (Canada, Norway, Sweden and the UK), so there is plenty of potential for further growth in internet advertising’s market share.

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Internet advertising is now clearly dominated by Google, which has increased its share of the internet ad market from 34.9% in 2006 to 44.1% in 2010.

Over this time Google has tightened its grip on global search (raising its share of searches from 72% in 2006 to 85% now) and established a lead in traditional display and online video with the help of the acquisition and development of companies like DoubleClick and YouTube.

In addition, its three main early competitors (Microsoft, Yahoo! and AOL) have failed to match this pace of development and lost a lot of ground; their combined market share fell from 33.1% in 2006 to 13.8% in 2010. Since 2006 Facebook has established itself as a major supplier, increasing its market share from just 0.2% to 3.1% in 2010. Last year Facebook doubled its share and overtook AOL; at its current pace of growth it is likely to overtake Microsoft by the end of 2011.

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After the internet, the main contributor to global ad growth is television, which we forecast to supply 41.1% of new ad dollars between 2011 and 2014.

Television’s share of the global ad market has risen steadily over the last few years: we expect it to end this year with 40.2% of all ad expenditure, up from 37.0% in 2005.

The amount of time viewers spend watching television has increased, and even though viewers are presented with a wider choice of channels than ever, the biggest television events are attracting record audiences.

ZenithOptimedia expects the popular televised quadrennial events to lift television’s share to 40.4% in 2012, but beyond that ZenithOptimedia forecasts a very slight decline to 40.3% in 2013 and 2014, as often happens after a quadrennial year.

Newspapers and magazines have been declining since 2007, with a brief pause for magazines in 2010.

ZenithOptimedia expects this decline to continue throughout our forecast period.

Magazines are suffering less than newspapers, because the experience of reading a magazine is less easy to replicate online, and because they do not rely so much on the timely delivery of information, where the internet has a big advantage over newspapers.

ZenithOptimedia predicts magazine ad expenditure will shrink by 0.7% a year over the forecast period, while newspaper ad expenditure shrinks by 1.1%.

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Source: ZenithOptimedia

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