Media agency ZenithOptimedia forecasts that advertising spending on TV will be basically flat over the next three years. Meanwhile spending on digital media, particularly video, is expected to climb.
In its second quarter forecast, ZenithOptimedia forecasts that TV spending will rise 2% to $68.1 billion in 2016, an Olympic year, after a small dip in 2015. The agency sees spending increasing negligibly in 2017.
TV dollars are expected to continue to shift from broadcast to cable. ZenithOptimedia sees broadcast network spending sliding from $15.7 billion in 2017 from $17.4 million in 2014 following a decline in ratings. “Networks are continuing to focus on recapturing audiences across other screens, fueling growth of their digital and mobile business. Among these opportunities is the advancement of dynamic ad insertion,” the agency said in its forecast.
Spending on cable is seen rising to $24.2 billion in 2017 from $22.4 billion in 2014 as cable networks add more quality original programming to their lineups.
Syndicated TV is expected to hold relatively steady through 2017, while spot TV increases 1.5% in 2015, 3% in 2016 before staying flat in 2017.
Across all media in the U.S., ad spending is expected to rise 3.7% in 2015, 4% in 2016 and 3.7% to $197.2 billion in 2017. “Our largest increase in spend for 2015 are all from the digital category,” ZenithOptimedia said, noting a 32% increase in social media spending and 26% for online video.
“The growth of digital video viewers continues to rapidly increase due to growing content, user acceptance, and consumers’ higher comfort level of watching video through multiple platforms,” the agency said. “With growing digital video consumption, video ad spending is also up across all devices, with mobile devices seeing especially large growth largely due to millennials.”
Some of that online video is traditional television content being viewed on digital devices. “Inventory from television networks will grow but will still be limited in supply, which will prevent networks from packaging as much non-linear inventory as they might like in order to fulfil demand,” the agency said. “Networks are seeing more significant growth on the VOD platform.”
The demand for digital video is bringing more players into the space, the agency notes. “Leading digital partners (e.g. AOL, Yahoo!, Conde Nast) continue to develop quality video in order to capture video consumers. Taking note from YouTube’s increasing viewership, video content has shifted from professional, longer-form series to include snackable, short-form content built specifically for mobile devices to satiate consumer appetite through the day,” ZenithOptimedia said.
The Internet will be the biggest advertising medium in 12 key markets worldwide in 2017, the agency said. Globally, the Internet's share of global advertising spending will be just 4 percentage points behind television in 2017, compared with an 11-point spread this year.
ZenithOptimedia is expecting slightly slower worldwide ad growth than in early forecasts. Its current prediction is a 4.2% increase to $531 billion in 2015, with a 5% gain in 2016 and 4.3% in 2017.
“The Internet is quickly establishing itself as the dominant advertising medium, and on current trends will overtake television by the end of the decade,” said Steve King, ZenithOptimedia’s CEO, Worldwide. “However, this refers only to traditional television viewed on TV sets. The amount of time viewers spend watching online video on their laptops, tablets and smartphones is increasing rapidly, and advertisers are shifting their budgets online to follow them. The spread of Internet devices and new advertising technology will give advertisers new opportunities to communicate with and learn from consumers, and to do so more effectively than ever before.”
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