Mobile Will Dominate New Advertising Dollars Through 2018

Slug All Purpose with layers not groups (1)Mobile ad revenue will grow 128% by 2018, accounting for 92% of new global advertising dollars, according to the global ad spend forecast from Publicis Groupe-owned ZenithOptimedia, released Monday. That’s an increase of $64 billion over the next three years.

“Consumers are using their mobile devices to consume media in a place where they previously have never done so before, and in times and places they wouldn’t previously have access to,” said ZenithOptimedia’s head of forecasting, Jonathan Barnard.

Increased consumer use will create more mobile advertising opportunities, which will increase available inventory and, in turn, lower prices.

“It’s creating the opportunity to communicate more cheaply with consumers,” Barnard said.

Yet mobile still has obstacles to overcome, including limitations with cross-device and attribution measurements, as well as ad fraud and bot traffic.

But at least mobile advertisers don’t have to worry too much about ad blocking, since most content is consumed in-app and ad blocking usually occurs in the mobile browser, Barnard said.

ZenithOptimedia’s report further predicts digital advertising spend will overtake TV by 2017, a year earlier than predicted in December’s report. This is in line with MAGNAGlobal’s December forecast.

Digital Deep Dive

Digital will account for advertising’s global growth of 15.7% this year, at three times the average rate, the report said. Nearly 32% of this spend will be driven by social media, 22.4% by online video and 15.7% by paid search.

Internet advertising’s growth rate is slowing as it matures, but ZenithOptimedia predicts it will remain in double digitals for the rest of the forecast period through 2018.

The global advertising market will grow 4.6% this year, up from 3.9% last year, and reach $603 billion by the end of 2017. The presidential elections, Summer Olympics and UEFA football championship will lift ad growth by $6.1 billion, adding 1.1 percentage points to total global advertising growth.

Another factor driving ad industry growth is the slowing of the eurozone crisis, with markets such as Portugal, Spain, Croatia, Denmark, Hungary, Romania and Greece recovering annually after shrinking up to 50% from 2007 to 2013.

The report also identifies 30 emerging markets with long-term potential for rapid growth in Latin America, Asia and the Middle East.

Advertising spend across these markets totaled $7.7 billion in 2015, accounting for 0.37% of GDP. This spend is forecasted to grow at a rate of 15% each year until 2018, “more than three times faster than global average,” the report said.

Spend in these markets is predicted to increase by $3.9 billion by 2018.

“I would highlight Iran as being a really interesting market,” Barnard said. “It has a very large population, potential for high economic growth and recent opening of trade due to removed sanctions. Advertising is a very small portion of its total GDP, but as it grows it will take over a lot of the market.”

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