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Carat Cuts 2015 TV Ad Growth Forecast to 1.5%

Media agency Carat is forecasting slower growth for the TV industry in the U.S.

Carat estimates that TV spending will increase just 1.5% in 2015, down from the agency’s previous 2% estimate in March.

TV revenue is being “affected by investments being reallocated into digital videos as online media consumption and access to premium content continues to increase," the agency said in a report.

Overall Carat sees the U.S. ad market growing 4.3%, down from the 4.6% forecast in March. The agency also cut its outlook for growth in the Olympics and election year of 2016 to 4.5% from 4.7%.

“The outlook for the advertising market in the US remains positive, largely fueled by digital platforms, especially within the mobile sector that is growing by approximately 50% year-on-year," the report said. “Digital advertising spending including mobile is forecast to overtake TV advertising spend by more than US $4 billion by 2018.”

Digital’s strong growth trajectory is driven by online video, programmatic and mobile, Carat said. By the end of 2015, U.S. market programmatic transactions will account for 52% of non-search digital advertising spend, with growth at a rate of about 20% a year predicted to continue for the next few years.

Mobile is experiencing the greatest spend growth across all media and Carat predicts year-on-year growth in Mobile spend at 51.2% in 2015 and 44.5% in 2016.

Worldwide, Carat sees advertising spending growing 4% in 2015 to $529 billion, a smaller increase than the 4.6% forecast in March. The agency sees a 4.7% increase in 2016.

“Carat’s latest advertising spend forecast shows optimism balanced with realism during a year of increased volatility in major markets such as Russia and China. Noticeably, the landscape is becoming increasingly complex as previously grouped markets, such as the BRIC economies, are now operating differently and economic situations can quickly change markets at pace,” said Jerry Buhlmann, CEO of Dentsu Aegis Network, Carat’s parent.

“Digital media continues to achieve outstanding growth as the effectiveness of this medium and results achieved, especially with millennials, warrants the upsurge in spend levels. As Digital rapidly evolves into a more established asset and Programmatic and Search bring stronger performance and efficiency, we continue to add value to our clients by delivering innovative solutions that are different and better,” he said.

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.