The digital takeover of global ad spend ain’t here yet, according to Carat’s global ad forecast.
“Not to discount digital by any stretch of the imagination, but we’ve seen somewhat of a resurgence of what’s going on with linear TV,” said Andy Donchin, chief investment officer at Dentsu Aegis Network, which owns Carat.
Some advertisers are moving money back to TV after feeling disenchanted by the inventory quality in digital and not getting the ROI they expected, Donchin said. (And the recent scatter market was quite strong.)
But digital is still the highest growth area. “Money is still going in a bigger way over to digital,” Donchin said.
Globally, Carat forecasts a 4.4% sequential increase in ad spend to $548.2 billion in 2016, a $23 billion increase from last year. Carat predicts 4% global ad spend growth in 2017 to $570.4 billion, much of which will be fueled by double-digit growth in digital (15.6% YoY in 2016 and 13.6% YoY in 2017).
TV still commands the largest share of global media spend this year at 41.1%. In the US, Carat forecasts TV will make up 38% of US ad spend in 2016, dropping slightly to 37.8% in 2017. By contrast, digital will account for 27.8% of US ad spend in 2016, hitting $56.8 billion.
The US presidential election will contribute $7.5 billion in incremental US ad spend this year, significantly more than in any presidential election in the past, according to Donchin.
“It just shows you how polarized we have gotten and how much money people are willing to spend,” he said. “Each side is going for blood.”
Despite growth in digital, however, most of that political spend is in linear TV.
Seventy percent of election dollars went to TV buys, mostly local buys in battleground states, according to Carat.
“I oversee our local TV buyers and they can’t get anything because everything is going to election buys,” Donchin said. “I think now that we’re getting close to the election, you’ll see more money spent on the national side of things.”
Digital Breakdown
Globally, digital will account for 27.7% of ad spend growth this year at roughly $20 billion, rising to 30.2% in 2017. Digital will maintain double-digit growth in the US (16.7% in 2016 and 14% in 2017) as TV continues a steady decline (4% growth in 2016 and 2% growth in 2017).
Globally, mobile spend will grow 48.8% in 2016 and 38.9% in 2017. Social media will grow 35.3% in 2016 and 28.7% in 2017. And online video will grow 41.3% in 2016 and 32.8% in 2017.
In the US, video will be the highest area of digital spend, growing 50% YoY, followed by mobile (49% YoY) and social (45% YoY). That’s because it’s easier for buyers to shift TV budgets into online video, Donchin said.
“It’s much easier to use video as a TV complement,” he said. “When you have one person who can move dollars from one bucket to another, that’s why you see video going up.”
Programmatic will also continue a strong global growth trajectory of 32% in 2016 and 25% in 2017. Carat did not break out programmatic growth figures for the US.
