The World Cup will help the global ad market grow 5.4% in 2014, up from 3.9% in 2013. Growth will continue to improve over the next two years, reaching 5.7% in 2015 and 6.1% in 2016, driven by continued economic recovery, including, at last, the Eurozone.
According to ZenithOptimedia’s new Advertising Expenditure Forecasts, we predict that the FIFA World Cup will boost global adspend by an estimated US$1.5bn this year. The event will deliver large television audiences and high interest in news media and sport websites, at a time of year when – in the northern hemisphere at least – people normally spend less time consuming media. We expect TV to benefit the most, but World Cup advertisers will spend more of their budgets on internet advertising, with advertisers more active on social media than during any previous sporting event.
We forecast the World Cup to have the biggest impact in Latin America, where the matches will be ideally timed for Latin American viewers. ZenithOptimedia predicts that the World Cup will add as much as US$500m to the Latin American ad market this year. Despite the lower levels of interest in football in North America, we expect the Cup to add an extra US$300m to the region. We also expect an extra US$300m in Western Europe, where time differences are still quite good. The disadvantageous time differences in Asia Pacific, however, will see a lower level of additional spend in the region: US$250m. We expect the remaining US$150m to come from Central & Eastern Europe, the Middle East and North Africa, and the rest of the world.
Western Europe continues to recover
Western Europe continues to strengthen: we now expect adspend to grow 2.2% this year, up from the 1.7% we forecast in April. This is mainly thanks to a stronger than expected recovery in Sweden, where we have increased our forecast for 2014 from 0.1% to 2.8% growth, and continued improvement in the UK. The UK was already the fastest growing market in Western Europe in 2013, growing by 5.1% while the region as a whole shrank by 0.6%. This year, demand from UK advertisers has strengthened as the economy has continued to improve, and we now expect UK adspend to grow 7.4% in 2014, up from the 5.8% we predicted in April.
Our forecast for the Eurozone this year is essentially stable at 0.8% growth, compared to the 0.7% we expected in April. Economic growth in the region was disappointing at 0.2% in Q1, but our expectations for the zone’s long-term prospects are improving: we now forecast 1.9% growth in 2015, up from the 1.6% we forecast in April, and 2.2% in 2016, up from 1.7%.
Ukraine conflict weakens Central & Eastern Europe
The conflict in Ukraine has severely disrupted commercial activity, and advertisers have sharply reduced their expenditure in the market. We now forecast adspend in Ukraine this year to shrink 32.5%, substantially worse than the 11.3% decline we forecast back in April. The Russian economy has suffered from sanctions imposed by the US and the EU, and a withdrawal of international investment, leading us to downgrade our 2014 growth forecast for Russia from 9.0% to 6.9%. Our forecast for Central & Eastern Europe as a whole is down from 6.9% to 4.2%.
Mobile is the main driver of adspend growth
Mobile advertising (by which we mean all internet ads delivered to smartphones and tablets, whether display, classified or search, and including in-app ads) has now truly taken off and is growing 5.5 times faster than desktop internet. We forecast mobile advertising to grow by an average of 49% a year between 2013 and 2016, driven by the rapid adoption of smartphones and tablets, and the subsequent explosion of mobile search and media consumption. By contrast we forecast desktop internet advertising to grow at an average of 9% a year. We forecast mobile to contribute 38% of all the extra adspend between 2013 and 2016, ahead of television (accounting for 31% of new ad expenditure), followed by desktop internet (30%).
Television advertising growing healthily, but losing market share to brand-building on the internet
The World Cup will provide a big boost to television in June and July, but we expect its share of the global advertising market to begin to fall this year, after peaking in 2013. Television’s global market share rose slowly but steadily for decades, increasing from 29.9% in 1980 to 39.6% in 2013. We now expect its share to erode to 39.4% in 2014 and 38.3% by 2016. This is not because advertisers are withdrawing from television – far from it, we expect television adspend to rise at an average of 4.4% a year to 2016. But internet advertising is growing so much faster – at 16.2% a year – partly because it now offers credible brand-building alternatives to television.
Programmatic buying allows advertisers to target traditional display ads accurately and efficiently; online video offers high-quality content that viewers can watch whenever they want and – using smartphones and tablets – wherever they want; while advertisers are learning how best to use social media to foster long-term relationships with consumers. Traditional display is growing at 15.8% a year, online video at 23.9% a year and social media at 29.9% a year.
Video advertising remains dominant
Online video offers broadcasters the opportunity to tap into the rapid rise of internet advertising. Taken together, we forecast television and online video to increase their share of the global ad market from 41.2% in 2013 to 41.3% in 2014, although we do expect it to fall back to 40.8% in 2016. Nevertheless, video advertising as a whole will remain the best way to build brand awareness and engagement for many years to come.
“The World Cup is a great opportunity for advertisers to reach passionate and involved audiences worldwide. While television will remain central to how fans experience the competition, advertisers are using digital media more than ever before to help shape this experience. Over the next few years internet advertising will play an even greater role in supplementing the brand-building power of television,” said Steve King, ZenithOptimedia’s CEO, Worldwide.