Adspend to grow by 5% in 2015 and 6% in 2016 – but NZ will struggle

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Global adspend will grow 4.9% to reach US$545 billion in 2015, according to ZenithOptimedia’s new Advertising Expenditure Forecasts, released yesterday by ZO NZ.

The global economy is expected to improve (the IMF predicts 3.8% global GDP growth in 2015, up from 3.3% in 2014) but global advertising faces a tough year-on-year comparison after the Winter Olympics, FIFA World Cup and US mid-term elections in 2014. Adspend growth will therefore be slightly below 2014’s 5.1%.

In NZ, despite upgrading expected online revenues for 2015, ZenithOptimedia has downgraded total adspend predictions from their June 2014 release by 1% to NZ$2298 million. The main culprits in this downgrade come from print media with -3% ($15 million) for newspapers and -7% ($15 million) for magazines.

“It’s hard to see where NZ print media are going to arrest their slide” says group business director Alex Lawson. “As these mediums continue to slip from the traditional spend-and-reach behemoths that they were, we’ll see if they can re-invent themselves to a future relevant product for consumers –  maybe an easier task for the print magazine industry than printed newspapers.”

2016 will be a quadrennial year – with the Summer Olympics, US presidential elections and the UEFA European Football Championship – and ZO expect these events to propel global adspend to 5.6% growth that year, before it slips back to 5.2% in 2017 in their absence.

In NZ with the impact of the US presidential election and European Football Championships not having a major advertising impact, ZO predict a steady increase in adspend of +1.6% from 2015 to 2016, rising a further 1.8% through 2017.

Transition to mobile plays to the strengths of social

Mobile is by some distance the main driver of global adspend growth, and is forecasted to account for 51% of all new advertising dollars between 2014 and 2017, growing by US$42 billion. ZO expect mobile advertising to grow by an average of 38% a year between 2014 and 2017, driven by the rapid spread of devices, innovations in ad technology and improvements in user experiences.

However, mobile’s share of adspend remains well behind its share of media consumption. Mobile will account for 6.2% of all adspend in the US this year, while eMarketer estimates it will occupy 23.3% of media consumption time.

This is partly because a lot of conventional display advertising does not work well on mobile. Compared to desktop display, mobile banners take up more screen space, are considered more intrusive, and are more likely to annoy consumers than engage them. Mobiles don’t accept cookies, so retargeting and tracking from the ad to the purchase is very difficult for most platforms.

There’s one area, though, where digital display has proved very successful on mobile, and that’s social media. Facebook and Twitter have rapidly restructured their operations for mobile consumption and advertising, and between them are on track to capture 33% of all global mobile adspend in 2014.

This is well above their 10% share of all digital adspend. Their ads are designed to blend seamlessly into the content feed – they look native rather than intrusive. They can track all their users’ media consumption within their apps, and can tie that into their desktop activity through their login details.

Social media provides a great example of how to adapt to mobile

In the local market ZenithOptimedia expect to see it following a similar trend. “For NZ we see mobile expanding at a significant rate in 2015 but that trajectory lessening in 2016 as we become more saturated,” said general manager Sophia Quilian.

“Along with social and video we see the main increase in mobile to be search based, serving a functional rather than brand need. Brand executions still work better on larger format devices such as desktop and tablet.”

ZenithOptimedia’s Worldwide ceo Steve King said: “Mobile technology is creating new opportunities for brands to build relationships with consumers. Social media provides a strong example of how to advertise effectively on mobile platforms, and we expect mobile marketing to develop further as other media learn from this example.”

Transition to programmatic has given a sharp boost to traditional display 

Programmatic buying is one of the fastest moving areas of adspend within the digital sphere. “We’re seeing great demand through our in-house programmatic offering, Audience on Demand,” Quilian said. “With programmatic technology evolving to deliver better premium, brand building experiences we only see this increasing in the foreseeable future.

“This has, and should continue to, provide a sharp boost to ‘traditional’ digital display, as well as video and social. Growth in traditional display leapt from 14% in 2012 to 18% in 2013, and we estimate it at 26% in 2014, its fastest rate of growth since 2007.”

In NZ, ZO estimate a slightly lesser growth rate than global but still foresee a 6.8% increase in 2014 for digital display and a further 7.5% in 2015.

Around half of all display is bought directly by advertisers, most of them small local companies spending only a few thousand dollars a year. These currently have little access to the programmatic marketplace. Most programmatic technology has been designed for large-scale campaigns, and while a few companies are trying to adapt programmatic buying for small businesses, these attempts are at early stages.

As technology evolves to bring the advantages of programmatic buying to small businesses we can expect another boost to traditional display spending.

“The swing in recent times towards programmatic buying is similar to the initial swing to digital from traditional” says Alex Lawson, “The opportunities that programmatic affords us now through our in-house desks and tools mean that we have far more innovative ways to reach consumers, without the huge amounts of financial wastage than before. We’re seeing great success on a wide range ZO clients within this area.”

About ZenithOptimedia

ZenithOptimedia is a leading global media services network with 262 offices in 74 countries. It is part of Publicis Groupe.

About ZenithOptimedia’s forecasts

ZenithOptimedia’s Advertising Expenditure Forecasts report contains forecasts of advertising expenditure by medium for 80 countries. It has been published continually since 1987, and is used by agencies, media owners, banks, analysts, consultants, academics and governments around the world. For information on purchasing your copy please contact the Auckland office.


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