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Ad growth in 2013 will pave way for recovery

September 30, 2013

The global advertising market is set to enjoy the same healthy rate of growth experienced in 2012 – which saw adspend boosted by the London Olympics and the US elections – reflecting the extent to which the advertising market is now stabilising.

According to the latest Advertising Expenditure Forecasts from ZenithOptimedia, the global advertising market is on course to grow 3.5 per cent in 2013, the same rate experienced last year, but without the boost of the quadrennial effect.  This is the same growth rate ZenithOptimedia predicted in Q2 this year – and this is the first quarter since Q2 2012 when ZenithOptimedia has not downgraded their forecast for 2013 – underlining the stability now being seen in the global advertising market.  Expectations for this year have finally levelled after a long period of slow erosion by bad economic news.

ZenithOptimedia expects stronger growth over the next two years – of 5.1 per cent in 2014 and 5.9 per cent in 2015 – primarily due to the European economy, currently acting as a brake on global ad growth, becoming healthier. The Eurozone came out of its 18-month recession in Q2 2013, and its economic recovery is expected to gather pace gradually over the next couple of years. The Eurozone ad market should follow suit. Eurozone adspend shrank 5.2 per cent in 2012; we forecast a smaller decline in 2013 of 4.3 per cent, followed by 0.7 per cent growth in 2014 and 1.9 per cent growth in 2015.

Despite these prospects for recovery, a steeper-than-expected decline in Eurozone adspend in the first half has weighed down our forecast for adspend growth in mature markets this year, which ZenithOptimedia  has reduced to 1.4 per cent from 1.7 per cent in June.

There has been no sign of a concerted advertising slowdown in rising .arkets, despite concerns over their short-term economic prospects. Economic growth has slowed in the BRICs (Brazil, Russia, India and China), among other Rising Markets, as demand for their exports has weakened and international investors have begun to turn their attention to Mature Markets.

However, Rising Markets still have young populations with improving education, infrastructure, productivity and adoption of technology. Their contribution to the world economy will continue to grow for decades to come. Advertisers have not been put off by the recent problems and are investing for the long term. ZenithOptimedia has actually increased their forecasts for adspend growth in Rising Markets this year to 7.6 per cent, up from the 7.0 per cent forecast in June.

After several false starts, mobile advertising has now truly taken off, and is forecast to account for 37 per cent of all growth in global ad expenditure this year, and 31 per cent in 2014.

Mobile advertising is still relatively small – ZenithOptimedia expects it to total $14.3 billon worldwide this year, or 2.8 per cent of total ad expenditure – but it is growing extremely rapidly: ZenithOptimedia forecasts 77 per cent growth in 2013, followed by 56 per cent in 2014 and 48 per cent in 2015. By 2015 ZenithOptimedia expects mobile adspend to total $33.1 billion and account for 6.0 per cent of total ad expenditure.

Several factors are contributing to this swift expansion: the rapid adoption of smartphones and tablets; new ad formats tailored for mobile (such as adding geo-location and click-to-call options to mobile search results); and improved standardisation of ad formats, ad serving and measurement, which will increase accountability and make it easier to calculate the ROI on mobile advertising.

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