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Digital Ad Spending to Pass TV in U.S. by 2017, New Forecast Says — Magna Predicting Global Media Growth of 4.8% to $536 billion in 2015

Dec 8, 2014  •  Post A Comment

By Alexandra Bruell
Advertising Age

Global ad revenue will grow 4.8% to $536 billion in 2015, according to a new forecast from Magna Global. That’s roughly in line with the group’s last forecast, in June, when it said it expected 4.9% growth next year.

The top line is similar to another forecast, from ZenithOptimedia, predicting that global ad spending will rise 4.9% in 2015 to $545 billion. ZenithOptimedia revised its forecast downward by 0.4%.

Digital media will reach 30% market share globally in 2015, according to Magna Global, and it’s on track to surpass TV revenue in the U.S. by 2017.

Ad revenue from digital media grew 17% to $142 billion this year, thanks to mobile campaigns and new social formats, Magna Global said. It’s expected to increase another 15% in 2015.

Digital media is already the number one category in the U.K., among other international markets.

Other media categories weren’t so lucky, as they “suffered from the competition of television and digital in 2014,” according to the Magna Global report. Newspaper ad sales decreased 4.3% while magazines shrank 7.3%. Radio was flat while out-of-home media grew 3.4%.

Within digital, paid search is the number-one format with nearly half of all global dollars, followed by display (21%), social (12%) and video (8%). Mobile ad spending is expected to grow rapidly and represent a third of total digital revenues by 2016, according to the forecast.

In 2015, Magna is predicting growth of 2.7% to $169.5 billion for the U.S.

TV revenue in the U.S. will decrease by 1.4%, the agency said, while digital media will increase 15.5% to reach 31% market share.

North America advertising revenues grew 4% this year, with 4% for U.S. and 3.9% for Canada. In the U.S., that’s compared to 2010 growth of 6.6% and a 2012 increase of 5%.

Mediocre spending in the U.S. was the result of a number of factors, including bad weather that hit retail, restaurants and automotive dealers early in the year, as well as heightened interest in digital.

“The shift to digital is having a deflationary impact on the entire market as digital formats, whenever comparable to traditional format, look cheaper and therefore erode the pricing power of traditional media categories,” the agency wrote.

TV ad revenue grew 4.8% in 2014, far below Magna Global’s spring forecast of 8.6%.

Russia saw the “single biggest negative revision,” with its 2015 advertising growth forecast cut from 7% to less than 1%, according to Magna Global. The revision is due to the combination of declining energy prices and the “withdrawal of Western investors amidst geopolitical tensions,” Magna Global said.

“Not only is there the expectation of much slower Russian real GDP growth — IMF forecasts down over 1% since the spring — but Russia is also at the epicenter of many of the regional headwinds,” the company said in the forcast. “Compounding these impacts are ad market specific headwinds, including the upcoming ban on Pay TV advertising as well as OOH inventory reductions.”

Australia, India, Japan, Spain and the U.K. will grow faster than previously forecast, while China, Russia, Germany, Brazil and Canada will grow at a slower rate than previously expected, said Magna Global.

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