Blog Post

Zenith Pulls Back A Bit On Global Ad Spend Forecast; Display Holds Steady

As economic uncertainty deepens amid a continued European debt crisis and a potential one in the U.S., Zenith Optimedia has revised its global ad spending outlook downward ever so slightly to a decent 4.1 percent rise from April’s prediction of a 4.2 percent gain. As a result, global internet advertising is also being downgraded a bit to a still robust 14.2 percent from 14.4 percent three months ago.

In general, the internet remains the fastest growing medium, rising an average of 14.2 percent a year between 2010 and 2013, Zenith says. Globally, internet advertising will grow by $31.3 billion, from $63.7 to $95 billion between that period, and within two years, the internet will be the world’s second-largest medium, with an 18.3 percent share of expenditures.

Display is the fastest-growing segment within online, growing by 16.4 percent a year. That prediction is unaltered from Zenith’s previous view. The growth is primarily coming from online video and social media, thanks to more self-serve streaming ad options for the former and the surging increase in time spent by consumers for the latter.

— In the US, social media usage rose 25 percent over the last year, and now accounts for 16 percent of all time spent online — as such, it now comprises 34 percent of display impressions.

Paid search is growing by 14.4 percent a year, but its growth is being slightly constrained by the shift in search behavior from desktop to mobile devices, where costs are much lower.

Online classified is growing relatively slowly, by 9.1 percent a year, while employment and real estate markets remain soft in major global markets.

Compared to its rival forecasters, Zenith’s display predictions are safely in the middle, though it continues to lean in the optimistic direction:

— WPP’s GroupM expects 12 percent gains for display this year for the U.S. and a 10 percent rise for 2012. Globally, those numbers are expected to be 14.3 percent and 12.4 percent, respectively.

— IPG’s Magna Global said in April that online ads would rise 18.7 percent.

–eMarketer, which recently revised its online outlook upward significantly from December, projected a 20.5 percent gain for online, adding that the lion’s share of those revenues will go to the five major ad-selling companies — Google (NSDQ: GOOG), Yahoo! (NSDQ: YHOO), Facebook, Microsoft (NSDQ: MSFT) and AOL (NYSE: AOL) — which will get 67.7 percent of total online ad spending in 2011.