Ukraine unrest hits ZenithOptimedia adspend forecasts

ZenithOptimedia, the Publicis Groupe media network, has downgraded its global ad forecast as a result of disruption to trade and investment caused by tension over Ukraine.

Steve King: chief executive of ZenithOptimedia Worldwide
Steve King: chief executive of ZenithOptimedia Worldwide

The network forecasts ad expenditure will grow 5.3 per cent this year, down from its 5.4 per cent forecast in June, to reach $523 billion (£319.9 billion).

The same tensions have reduced the forecast for 2015 by 0.4 points to 5.5 per cent

ZenithOptimedia said the rapid development of technology would underpin growth and help drive it to 5.9 per cent in 2016. However, this also marked a decline from the 6.1 per cent growth forecast in June.

Nevertheless, the marginally downgraded figures will still strongly outperform 2013’s growth of 3.9 per cent.

The UK is expected to overtake Germany by 2016. The UK is the fifth-largest ad market but is growing far faster than Germany, the fourth largest.

In 2013 the UK expanded by $1.0 billion whereas Germany expanded by $53 million. ZenithOptimedia forecasts the disparity will be even greater this year, at $1.33 billion, and predicts that the UK will overtake Germany to become the world’s fourth-largest advertising market by 2016.

Growth in social media advertising and video drove the 17.1 per cent growth in internet advertising in 2013. Internet adspend is expected to grow by an average of 16 per cent between 2014 and 2016.

Meanwhile, mobile advertising (ie all internet ads delivered to smartphones and tablets including in-app ads) is forecast to grow by an average of 51 per cent a year between 2013 and 2016, driven by the rapid spread of devices and improved user experience.

Mobile will overtake radio, magazines and outdoor to become the world’s fourth-largest medium by the end of the forecast period.

Global TV adspend is forecast to grow 4.8 per cent in 2014, up from 3.9 per cent in 2013, after being boosted by the Winter Olympics, World Cup and the mid-term US elections.

TV growth is expected to slow to 3.1 per cent in 2015 before leaping to 4.7 per cent in 2016 amid the summer Olympics, European football and US presidential election.

Despite this, television’s share of global advertising spend is likely to fall back over the next few years as desktop and mobile internet will grow much faster.

ZenithOptimedia believes TV’s market reached a peak in 2013 at 39.6 per cent and will fall back to 38.3 per cent in 2016.

Steve King, the chief executive of ZenithOptimedia Worldwide, said: "Internet advertising is expanding rapidly as new technology makes it easier for advertisers to reach the right people at the right time with the right message, at an efficient price.

"The spread of ever more sophisticated mobile devices will help this expansion continue, sustaining steady growth in global adspend for the next few years."

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