Publicis Groupe media shop ZenithOptimedia and its rival, IPG’s Magna Global, predict the global growth of ad spend through 2016 will come from a number of new channels – namely more dollars allocated to mobile and social buys as well as the penetration of programmatic in more countries.
Mobile wave: While analysts have predicted that every year over the last decade would be the "year of mobile," as of 2014, those cheerleading the rise of advertising on smartphones and tablets can feel much more comfortable making that claim, according to ZenithOptimedia's latest forecast.
Although mobile constituted just 2.7% of the global ad spend in 2013, Zenith anticipates that share will rise to 7.7% over the next two years -- becoming the fourth largest ad segment, ahead of radio, magazines and out-of-home.
"This the first time in the past 20 years that a new platform is expanding overall media consumption without cannibalizing any of the other media platforms," Zenith's report states. By itself, mobile will fuel 36% of all new ad spending through 2016, slightly ahead of television. Mobile and television are increasingly intertwined, as shown by partnerships such as Nielsen's audience measurement deal with Twitter, as networks and marketers try to get a better read on what sort of messages resonate with young viewers.
CPMs rising: Even though the PC-based Web will only contribute 25% of the new advertising dollars Zenith is projecting, general display continues to look strong. Zenith predicts online advertising’s share will increase to 26.6% in 2016 from 20.6% in 2013. Nevertheless, Zenith is also warning of greater challenges to ad prices due to the shift from direct sales to programmatic, with real-time bidding in particular.
Display is also taking a hit as spending for digital gets more diffuse. Money that used to be allocated for banner ads is moving to social, mobile and video. In a glass-half-full view, Zenith says display advertising will become the focus of more customized and "premium" branding campaigns. That will at least slow the decline of CPMs in the face of challenges from those other subset digital ad segments. In the best-case scenario, as cheaper direct-response dollars head to RTB, tailored display ads could actually see a boost in prices.
CPMs in general will also likely rise thanks to increased use of viewability and other measurements that tell advertisers whether or not ads were seen and "engaged with" by targeted consumers. Overall, Zenith predicts CPMs will rise roughly 5% by 2017.
Premium video: Zenith cites eMarketer stats that suggest average prices for "premium" placements went for about $10.40 for general display this year, while mobile premium was relatively close behind at $9.30. Still, for the best inventory, video CPMs were practically through the roof at $32.80.
Even the average CPM for video is pretty high at $24.60, especially when compared to mobile prices ($3.00) and general display ($1.90).
Programmatic forecast: Programmatic ad sales will hit $12 billion worldwide by the close of 2013, according to Magna's report, which counts both RTB and other forms of automation in its survey (paid search is excluded). About $7.4 billion in programmatic dollars will come from the US.
As with other fast-rising areas of the ad market, programmatic is still small. But to get a sense of how swiftly that's changing, Magna is calling for worldwide programmatic expenditures to jump to $32 billion by 2017. By that point, programmatic in the US will command $17 billion annually, with $10.5 billion devoted to RTB.
"The US will remain the most developed programmatic market globally, with 80% of display-related spend being transacted in a programmatic fashion (either RTB or non-RTB) by 2017," Magna says.
Outside the US, the adoption of programmatic will be slower, but the penetration will be felt in countries such as the Netherlands, where 60% of display sales will be automated, followed by the UK (59%), France (56%) and Australia (52%).
Global growth: Magna also released its summary for 2013 to 2014 and is similarly upbeat.
Zenith forecasts total worldwide ad spending rising from 3.6% in 2013 to 5.3% next year, with future gains shooting up to 5.8% through 2016.
WPP's pessimism: In comparison, Magna is expecting a 3.2% increase in 2013 spending to $489.6 billion. As the residual economic weakness from the global recession finally appears to ebb, worldwide ad dollars will grow by 6.5% – Magna projected 6.1% gains last summer – in 2014.
Meanwhile, WPP's GroupM is staking out the relatively pessimism position among the ad holding companies. GroupM says global ad spending will rise a decent 4.6% next year, with the US seeing a meager 2.9% gain.
“Ad spending in 2014 will enjoy a slight bump thanks to the Winter Olympics in Sochi, with spending coming mostly from existing budgets,” said GroupM Chief Investment Officer Rino Scanzoni in a statement. “But overall we estimate only marginal US growth on a comparable component basis.”
GroupM expects digital to make up 19% of the total ad spend this year (it's calling for $97 billion in expenditures) and 21% in 2014 ($110 billion), with respective growth rates of 15% and 14%.