Blog Post

ZenithOptimedia: Social Media, Mobile Ads Fuel Improved Outlook

ZenithOptimedia has revised its ad spend forecast upward for the U.S. and Europe, while the internet is poised to grow 13.1 percent in 2010 and gain another 16.1 percent year-over-year in 2011. In the U.S., mobile ad spending and social media ad spending have had a particularly strong impact on the online space’s growth.

In April, Zenith revised its 2010 global advertising growth from 0.9 percent to 2.2 percent — its second consecutive upgrade following 18 months of retreating from previous forecasts.

The Publicis Groupe media buyer notes that both mobile and social media ad spend are most visible and best measured in the U.S., making it a good barometer for the rest of the world. Thanks to the continued high sales rates for Apple’s iPhone and phones powered by Google (NSDQ: GOOG) Android’s OS, mobile advertising is growing faster than the internet in general. The same is true for social media, thanks mostly to Facebook. Obviously, before last year, both options were still largely ignored by major marketers, except as an experiment.

Zenith is forecasting mobile ad spend will grow by an average of 43.2 percent a year between 2009 and 2012. Social media ad expenditures are expected to gain 30.2 percent a year during that period, compared to 15.6 percent a year for the internet as a whole.

There is some overlap when it comes to assessing the mobile and social media ad growth rates, since many consumers use their mobile devices to access their social profiles. Mobile and social advertising accounted for just 5 percent of online ad spend in the U.S. in ’09, but Zenith believes that its share will rise to 8 percent in 2012.

While that growth is impressive, when we talk about online advertising, paid search remains the main engine of rising internet ad spend. Search comprised 50.2 percent of all internet ad dollars last year, and Zenith anticipates a rise to 52.6 percent in 2012.

While display started to recover in the latter half of ’09, its contribution to total internet spend fell from 32.9 percent in 2008 to 31.9 at the end of last year. Along with social media and mobile, internet video’s accelerated growth should help display stabilize this year and increase its share of internet spend to 32 percent in 2012.

Overall, internet ads’ global market share from 10.5 percent in 2008 to 12.7 percent in 2009. By 2012, it will account for 17 percent of the total ad pie, Zenith says, nothing that’s just two percentage points below newspapers. Speaking of which, newspapers have been losing share every year since 1987, when they accounted for 40.6 percent of all ad spending. By ’09, that share had fallen to 23 percent. Zenith says that number will fall further to 19.2 percent in 2012.