ZenithOptimedia: Mobile to drive growth in global adspend over the next three years

Advertising is set to see the strongest sustained period of growth in ten years, with global adspend growth forecast to rise from 3.6% in 2013 to 5.3% in 2014. Growth is then set to increase to 5.8% in 2015 and 2016. The principle engine of this growth will be mobile technology, which is expanding the space for media consumption.

According to ZenithOptimedia’s new Advertising Expenditure forecasts, growth in global adspend next year will come from the continued steady improvement in Europe and the three ‘semi‐quadrennial’ events: the Winter Olympics, the football World Cup, and the mid‐term elections in the US. ZO forecasts that the global advertising market will accelerate to 5.8% in 2015 as a strong broad‐based economic growth takes hold, followed by another year of 5.8% growth in 2016. This assumes that the Eurozone’s gradual recovery continues and no new crisis occurs.

Mobile is now the main driver of global adspend growth. This the first time in the past 20 years that a new platform is expanding overall media consumption without cannibalising any of the other media platforms. ZO forecasts mobile to contribute 36% of all the extra adspend between 2013 and 2016. Television is the second largest contributor (accounting for 34% of new ad expenditure), followed by desktop internet (25%), which continues to enjoy significant growth alongside that of mobile advertising.

Despite its sizeable growth, mobile advertising still only accounted for 2.7% of global adspend in 2013. By 2016, however, ZO expects it to account for 7.7% of adspend, leapfrogging radio, magazines and outdoor to become the world’s fourth‐largest medium. ZO counts as mobile all internet ads delivered to smartphones and tablets, whatever their format.

ZenithOptimedia’s New Media Forecasts details the growth of mobile technology in 31 countries across the world. In this report, we forecast smartphone penetration will increase across these markets from 37% in 2013 to 64% in 2016, while tablet penetration will increase from 9% to 16% over the same period.

From the 31 analyzed markets, South Korea has the highest smartphone penetration. 83% of people in South Korea now have a smartphone, and we expect this proportion to rise to 92% in 2016. The rest of the top five are in Western Europe: Norway (73% penetration in 2013, forecast to rise to 85% in 2016), Ireland (71% in 2013 and 92% in 2016), the UK (65% in 2013 and 83% in 2016), and the Netherlands (64% in 2013 and 72% in 2016).

The smartphone leader South Korea does not appear in the tablet ranking until 19th (11% tablet penetration in 2013 and 17% in 2016), thanks to the popularity of hybrid smartphone/tablets (“phablets”), which we have counted as smartphones. Instead, the Netherlands has the highest tablet penetration (41% in 2013 and 60% in 2016), followed by Australia (36% in 2013 and 50% in 2016), Norway (32% in 2013 and 38% in 2016), the UK (31% in 2013 and 47% in 2016) and France (29% in 2013 and 65% in 2016).

According to ZO, the world ad markets are growing with 2 different peaces. Mature markets struggle with with debt and low innovation, have populations ageing, growing numbers of retirees and a shrinking workforce, reason why ZO estimates they will grow at an average of just 3% yearly between 2013 -2016. When it comes of rising markets, they are improving their education systems, infrastructure, productivity and adoption of technology, have a young population and an expanding workforce. ZO estimates these markets will grow at 9% a year. For now, the rising markets are accounting for 35% of global adspend and are expected to contribute 61% of adspend growth between 2013- 2016.