Mobile continues to be the main propeller of digital growth, at desktop’s expense.
US mobile ad revenues will outgrow desktop by 2018, Magna predicted. Mobile advertising will account for 42% of digital ads by 2016, and half of all digital ad spend by 2017. Meanwhile, desktop revenues will remain flat.
Mobile grew 95% globally in 2015 and will continue to grow 34% annually through 2018, when it will reach $74.9 billion, Zenith said. Meanwhile, desktop will shrink 2% year over year, or by $7.1 billion, by 2018.
“We keep being surprised by the strength of mobile,” Letang said. “Mobile platforms are growing very rapidly in terms of consumer usage. We expect desktop-centric campaigns to be flat, and mobile will grow 42%. That’s very spectacular and happening very quickly.”
Online video is showing rapid growth, largely due to the decline of traditional display in mobile and the growth of social media. Magna’s updated report predicts 63% growth in the US this year, with a 12% decline in display.
Globally, Zenith sees online video and social media as key drivers of digital growth, at 20% and 24% year over year, respectively. Desktop will decline by 2% year over year. That’s a change from its March forecast, which predicted traditional display would grow at 6% year over year, Barnard said.
For the first time, Magna broke out social video, or autoplay video in social feeds, as a separate category. Social video on Facebook makes up 15% of total video spend, as well as 10% of social media spend, Letang said.
“We think social media ad revenue growth by 41% was driven by social video to a big degree,” he said.
“The two curves are crossing each other, with both digital media and TV getting approximately $68 billion in ad revenues at roughly 38% market share,” Letang said.
Despite digital’s catch-up, linear TV will see its largest growth period since 2012 this year. The channel increased 4.4% to reach $179 billion, which is impressive considering that Magna predicted in December that its growth would stall. But special events this year fueled that slight increase in spend, and TV is still showing signs of gradual decline.
TV ad spend grew 0.5% in 2015, 1.4% in 2016 and is expected to slow to 0.6% in 2017, Letang said.
“By and large over the long period, TV is flat,” he said. “The CPM inflation is approximately offsetting the decline in ratings.”
Zenith forecasts a similar pattern: 0.4% growth in 2015, by 1.4% this year and 0.3% next year, Barnard said.
“People are going elsewhere for their entertainment,” he said. “The actual number of viewers is declining.”
However, traditional advertisers still rely on linear TV to reach their core audiences – and despite inflated CPMs, they’re jumping on dwindling supply, Letang said.
“Over the last two years, we were interpreting the slow growth of TV as a sign that some budget that would otherwise go to TV campaigns would go to digital formats,” Letang said. “Now we see both TV and digital growing very robustly. For many categories, good, old-fashioned linear TV remains important, all the more so as audiences are getting scarce.”