Global Advertising Revenues to Grow by +4.6% to $526 billion in 2016

In its latest report on the global advertising marketplace, covering 73 countries, MAGNA GLOBAL estimates that media owner advertising revenues grew by +3.2% in 2015 to $503 billion. This is lower than the previous forecast (+3.9% in June 2015) and represents a slowdown compared to the 2014 growth (+4.9%).

In 2016, advertising revenues will be boosted by economic stabilization and the incremental spending generated around non-recurring even-year events (US Presidential and General elections, UEFA Football championship in Europe, Summer Olympics in Brazil). MAGNA GLOBAL is predicting ad sales to grow by +4.6%, marginally less than our previous forecast. Neutralizing the impact of non-recurring events (NREs) in 2014, 2015 and 2016 (generating approximately 0.9% of extra growth in even-numbered years), the global ad market would have grown by +4.1% in 2015 and +3.7% in 2016, which suggest no real 2016 acceleration in the underlying ad demand, beyond the cyclical drivers.

In terms of geographies, Asia Pacific was the fastest growing region this year (+6.5%). Latin America and Central and Eastern Europe, that used to show the highest growth rates in recent years, are suffering from economic slowdown reflected in ad spend cuts (-3.0% in CEE, +3.8% in Latam). Meanwhile, Western Europe continues its recovery (+2.9%), while North America is slowing down (+2.0%).

62 countries experienced ad revenue growth this year and eleven (incl. Chile, Ecuador, Finland, France, Greece, Kazakhstan, Norway, Peru, Russia, Singapore, Ukraine) suffered a decrease. The biggest contributors to the 2015 slowdown are the two BRICs countries affected by severe economic difficulties: Russia, where ad revenues are now expected to decrease by -12% (previously -11%), and Brazil (+4.4%, unchanged). On the other hand we have increased the 2015 growth estimate for China and the US. For 2016 we only expect four markets to remain in the red (Finland, Greece, Singapore, Kazakhstan) while 69 (including Russia) will experience some level of growth.

In terms of media categories, the +3.2% growth in 2015 was the results of digital media ad sales growing +17.2% to $160bn while traditional media ad sales were down -2.2% to $393bn. Television ($193bn) and radio ($32bn) were flat. Print ad revenues were once again heavily down (newspaper -8.6% to $61bn, magazines -10.1% to $25bn.). Out-of-home grew by +2.6% to $30bn driven by digital formats (+17%). Cinema ad sales grew 9% to $3 billion benefitting from improved measurement and trading mechanisms in several markets (e.g. US) as well as an exceptionally list of movie releases.

According to Vincent Letang, EVP, Director of Global Forecasting at MAGNA GLOBAL and author of the report:

“Traditional linear TV advertising stopped growing in 2015 for the first time outside a recession year. New generations increasingly rely on online VOD (sometimes ad-funded, sometimes premium ad-free) for video entertainment, while advertisers are keen to embrace new digital formats (video, social). Both supply and demand for linear TV impression are therefore decreasing, leading to little or no spending growth outside even-numbered years over the next five years. As a result digital media ad sales will become the number one contributor to global ad sales by 2017.”
Impact of Non-Recurring Events and Underlying Mid-Term Trends

In 2016, advertising sales will be boosted by incremental spend prompted by non-recurring events (NREs): US Presidential and General elections, Summer Olympics (Rio), the UEFA Football championship in Europe and the Copa America Centenario (Pan-American Football tournament hosted by the US in June 2016). According to MAGNA GLOBAL simulations, those non-recurring events will add no less than 5% to television ad sales growth in the US alone ($3.5bn out of $66bn), and an estimated 1% in other markets. Globally that translates into +2.4% incremental growth for TV in 2016. This means that the +3.6% growth we’re expecting for global television in 2016 would translate into just +1.4% when excluding the impact of NREs, compared to +2.2% ex NRE in 2015. Beyond the cycle of big events boosting television ad spend and revenues in quadrennial and even-numbered years, this reveals an underlying slowdown in global TV advertising. The main cause is an acceleration of viewing erosion, most perceptible in commercial demographics (18-49) and even more clearly felt among 18-34 that are turning to online on-demand video entertainment. This is accelerating in mature markets of North America and Europe and expanding to many emerging markets too. In most markets, this decline in the supply of monetizable impressions is barely compensated by a similar increase in CPM costs. In 2015, among developed markets, only a few (UK, Spain, Germany, Denmark) managed to show mid-single-digit growth in TV ad sales – a growth that was driven by high-single-digit CPM inflation offsetting the erosion in viewing.

When assessing the impact of NREs on the global, all-media ad market, we assume conservatively no NRE impact outside television, but the mere weight of TV (still nearly 40% of global ad dollars) means that NREs will generate +0.9% incremental growth in 2016 globally. Neutralizing the impact of NREs in 2014, 2015 and 2016, the global ad market would have grown by +4.1% in 2015 (instead of +3.2%) and by +3.7% in 2016 (instead of +4.6%).
North America: +2.0% this year, +5.0% next year

Media owners advertising revenues grew by +2.0% this year, in line with previous expectations (+1.7%) driving total market spend to $180 billion, with growth in the US (+2.1%) stronger than that of Canada (+1.1%). North America remains the biggest ad market in the world ahead of APAC, with approx. 36% of global ad sales.

In the US advertising sales grew by +2.1% to $167 billion this year and are expected to increase by +5.0% in 2016. Neutralizing the impact of incremental NRE spend over 2014-2016 (in the case of the US: Political & Olympic ad spend or P&O) ad sales would increase by +3.8% in 2015, and +3.3% in 2016.

The US economy outlook remains strong: real GDP grew by +2.4% in 2015 and predicted to grow by +2.6% next year while unemployment is down to 5%, consumer confidence is near a 10-year high and personal consumption – the macro-economic indicator most correlated to ad spend growth – will accelerate from +3.8% in 2015 to +4.8%. In that context the right question is probably why US ad spend and ad sales are not increasing faster than that, and indeed in the last two years the observed growth has been consistently below what the statistical regression would suggest in the current economic environment.

We believe the main reason is “digital deflation” linked to the transition from analogue to digital media. As media usage and ad dollars gradually migrate from traditional media to digital media and since digital media now represent on average a third of ad budgets, the overall budgets are stagnating and, in some spending categories, shrinking. “Digital Deflation” not only refers to digital media being generally cheaper than traditional media on a CPM basis and therefore reducing the overall cost of campaign when growing in the mix; equally important is the deflationary pressure that the shift is exerting on traditional media inventory vendors, some of whom are struggling to maintain prices in the face of shifting demand.

Looking at media categories, the +2.1% growth of 2015 was entirely driven by digital media while traditional media ad sales decreased by -5.5%: television -4.0%, newspapers -12.8%, magazines -13.6%, radio -2.9%, Out-of-Home (including cinema) +4.0%. OOH was the only traditional media category to grow thanks to the superior yield brought in by digital panels as well as better measurement and trading metrics allowing OOH and cinema to tap into branding budgets and TV budgets. Radio ad sales decreased by the same amount as last year (-3%) suggesting broadcast radio has now entered a long term decline similar to the one experienced by print media in the last ten years and for similar reasons: reach and listening remains high overall but younger demographics become hard to reach as they shift to digital, mostly on-demand audio.

National Television ad sales have been stronger than expected in the second half of 2015 due to sudden CPM inflation in the scatter market, despite soft upfront sales in the spring. This was caused by a stronger-than-expected decline in C3 ratings in the second half (e.g.  -11% in Q3 for broadcast networks, primetime, adults 18-19) and incremental spending from a brand new category of advertisers that created an unexpected shortage in inventory. Two “Daily Fantasy Sports” (DFS) betting sites were launched this year with powerful backing from major sports leagues and broadcasters and have been heavily promoted both online and on national TV since 3Q and the start of the NFL season in September. This sudden increase in demand contributed to the disruption in the balance of supply and demand and has created double-digit “premiums” (additional CPM inflation over upfront CPM inflation) in the 4Q15 scatter market for the first time in two years. The legality of Daily Fantasy Sports is now being challenged by some States, most recently by the New York State Attorney General, so there is uncertainty on whether DFS operators will be able to operate on such a large scale permanently. However, in the short term, they will certainly continue to spend heavily in 4Q15, which will continue to benefit broadcast and cable networks pricing.

Overall national TV ad sales grew by +0.3% to $42bn this year and are expected to decrease by -0.3% in 2016, excluding NREs (summer Olympics expected to bring approx. $700m in incremental ad sales). Factoring in Olympics revenues, national TV ad sales growth would be -1.2% this year and +1.4% next year. Beyond the inflation created by DFS spending spike this year and possibly next year and the cyclical influx of political spending, we believe that TV vendors, in the long term, won’t be able to obtain the CPM inflation rates they would need to offset the double-digit declines in ratings. As a result our 2015-2020 CAGR for US television (encompassing even and odd-number years) is now set at -0.7%.

After a difficult first half when automotive spending was below expectations, local television vendors experienced a better second half and 2015 should end up flat: -0.3% excluding Political, -9%  including the (lack of) political revenues compared to 2014. In 2016, local TV will benefit from $2.8bn of incremental revenues generated by political spending around Congressional, Gubernatorial and Presidential elections. This should boost 2016 ad sales by +10.7% to $23.4 billion, against an underlying (ex-political) trend of -1.4%

Digital media ad revenues grew by +19% this year to $59 billion in North America. Digital growth is mostly being driven by video (+42% to $6.3bn) and social media (+50% to 10.5bn), while Search remains the biggest format (+15% to $28.6bn). Mobile-based campaigns continues to surge to $19.8bn (+58%) to reach one-third of total digital spend. Mobile advertising will outgrow desktop/laptop ad revenues by 2018. In 2016, we expect digital media to grow by double-digit again (+14.6%) to $67.8bn to surpass television and become the number one media category in ad revenues, one year earlier than previously forecast, and one year before the same thing happens at global level.

In Canada, real GDP grew by only +1.0% in 2015, significantly below the April IMF forecast of +2.2%. Because of the economic slowdown in the second half of the year, advertising revenues grew by only +1.1% to CAD 12.9 billion, down from the +2.7% predicted in our June forecast. Television ad sales decreased for the fourth year in a row in 2015, dropping -2.2%, despite the minor drivers of a longer- than-expected election campaign and the Toronto Blue Jays making it to the MLB playoffs. The decline in Canadian TV revenues is expected to continue to 2020, with a drop of between 2-3% each year. There is uncertainty in the future of the Canadian cable television market (“specialty” channels) that accounts for approx. 40% of the TV advertising market; the introduction of a mandatory a-la-carte subscription system in 2016 might encourage many cable subscribers to drop non-essential cable channels to save on their monthly bill, therefore hitting the reach or very survival of many of those channels and concentrating viewing on fewer channels. Digital media ad sales increased by +13.5% in 2015 to reach CAD 4.6bn and market share of 35%. Other media categories struggle in 2015: print ad sales will be down about 10%, while radio will decline by -2.0%. For 2016, we are expected the Canadian market to re-accelerate to +2.5% growth.
Western Europe: this year +2.9%, next year +2.4%

Western European media owners advertising revenues grew for a third year in a row (+2.9% to $110bn), in line with previous expectations. The strongest growth came from the UK (+6.4%) and Spain (+8.8%) where both television and digital media spend keep growing strongly. Other large markets like Germany and the Netherlands, grew moderately (+2% to +3%), while Italy and France were essentially flat. At the euro periphery, Portugal and Ireland continue to recover (mid-single digit growth); Greece similarly grew in 2014 after media prices and spend hit rock-bottom and was expected to keep recovering, but the financial and political crisis of the Spring brought economic and advertising activity to a stand-still for several months, generating double-digit declines in ad revenues.

Because it has been growing faster in the last four years, driven by a more dynamic economy, the UK becomes the largest European ad market with £16.0bn of total spend ($26.3bn) and the fourth largest advertising market in the world, at the expense of Germany (now #5).

In 2016 the European market will benefit from the quadrennial UEFA Football Nations tournament, hosted in France. More than the Olympics (where broadcast rights are often controlled ad-free State-Owned broadcasters) the European Football tournament should drive incremental ad spend and support TV rates.

Overall we expect media owner ad revenues to increase by +2.5% to $113.4bn. Once again, the UK, Spain, and Germany will be the largest contributors.
Central and Eastern Europe: this year -3%, next year +4.1%

In Central and Eastern Europe (CEE) ad revenues decreased by -3% to $19.3bn. This decline is almost entirely due to the weakness of the Russian market (-12%) that represents 40% of total regional ad sales. As expected in our mid-year forecast, Russia’s media revenues suffered due to the severe economic slowdown (-3.8% in real GDP) caused by collapsing energy prices and aggravated by political tension and multinational companies cutting local investment. Excluding Russia, CEE ad sales growth in 2015 would be +4.8%.

CEE ad sales are still dominated by television with 44% share of total ad sales. TV ad sales however, decreased by -6% this year while digital media sales grew by 11%. All traditional media categories have been hit this year (Newspapers -10%, Magazines -17%), and Radio and OOH will also see reduced budgets. Digital media spend continues to be driven by social media (+29%), video (+25%) while display banners ad sales are starting to shrink (-1%). Mobile-centric advertising campaigns grew strongly (+52%) at the expense of desktop-based ad sales that barely grew (+3%)

While spending in the Russian market is expected to stabilize in 2016, it will take until 2018 for Russia’s advertising economy to recover to where it was in 2014. Russia’s ongoing financial crisis began in 2H 2014 with a combination of oil price declines and international economic sanctions. This triggered a decline in the ruble of over 50%, and not only caused economic sectors dependent on international imports to see massive functional cost increases, but also exacerbated the balance sheet weakness of many companies with dollar-denominated debt payments. Russia’s advertising trends match those of the greater CEE region, with every media format except digital shrinking, and even digital only up by +8%, compared to +22% in 2014.

The highest growth in the region was found in Estonia (+9%), followed by Turkey (+8%) and the Czech Republic (+7%). Estonian economy is strong, and the first half of the year was boosted by elections. The weakest growth in CEE outside of Russia was found in Kazakhstan (-5%) due to declining energy prices and also difficulty procuring media and advertising content that is priced in USD after a significant currency decline. Weakness is also found in Ukraine (-2%) which is shrinking in 2015 again as it continues to struggle through internal conflict and political uncertainty.
Asia-Pacific: this year +5.6%, Next Year +5.2%

Media owners ad revenues increased by an estimated +5.6% in 2015 to $146bn, making APAC the second largest region with nearly 30% of global spend. This is down slightly from previous expectations of +6.3%, despite the fact that growth was slightly stronger than expected in two of the region’s biggest markets (China +9.9%, India +16.3%).

Growth in 2016 is expected to be slightly weaker, at +5.2%, due to continuing slowing of the region’s economy. APAC is now the second largest global region, behind North America, having passed EMEA, with 29% of global ad revenues generated in the region. Given the high growth rates expected in APAC going forward compared to EMEA, the region will become increasingly critical to global advertising spend growth.

APAC’s GDP growth is expected to be +6.5% in 2015 according to the IMF, down from +6.8% in 2014. Economic growth will again slowdown slightly in 2016 to +6.3% as China continues to transition to a consumer economy while India accelerates. Despite concerns about APAC growth weakness and the spillover to the global economy, it’s important to keep in perspective that it’s only modest slowdown and APAC growth remains significantly ahead of most of the western world.

Television remains the largest media format in APAC with 40% of total ad sales in 2015, but growth has slowed from mid-single digits to low-single digits (+2%). While we expect television to show stability going forward, the days of 5-10% growth are gone. Television will remain the dominant media format longer in APAC than other regions, however digital media are expected to overcome television in ad sales by 2018. This difference in growth trajectory can be seen in the media CAGR expected through 2020: television will see compound growth below 2%, whereas digital media will see compound growth over 11% through 2020.

Digital Media remains the primary driver of advertising growth in APAC. Ad revenues grew by +22.4% to $43bn bringing the digital market share to approximately 29% of total regional ad sales in 2015, a figure that will increase to 32% in 2016. The drivers of digital growth are social media (+42.8% in 2015) and video (+41.8% growth). Social and video together now represent nearly 20% of total digital spend, up from just 12% three years ago. Search remains the largest digital media format with slightly over half of total digital budgets, and while growth rates are slowing, it remains a vibrant +23%. Across all digital formats, mobile is the primary driver. Mobile-centric ad campaigns (+71.4%) generated the bulk of regional growth, while desktop-based impressions are now stagnating (+2.8%). Advertising on mobile devices (smartphones, tablets) grew to represent nearly 40% of total digital ad sales in APAC in 2015, and will represent 70% of budgets by 2020. Digital is expected to remain strong in 2016 with nearly 16% growth y/y.

China is the largest APAC market and ad grew by +9.9% to just over $50 billion this, slightly above our mid-year expectations. It is now comfortably the second largest global market behind only the US. Chinese Real GDP grew by +6.8% in 2015, and is forecast to grow by +6.3% in 2016. Economic growth continues to slow down significantly, which is causing ad spend growth to slow from the heady double-digit growth rates witnessed in the first half of the decade, to mid-to-high single-digit growth in the years to come. Even at such moderated growth rates, the mere scale of the Chinese market will continue to make it the biggest contributor to global advertising growth. Digital media is the driving force in China: not only was growth a robust +29.3% in 2015, but digital spend is approaching half of advertising budgets (44.9%). This is driven by continued strength in search advertising which is still growing by +34% in 2015. In addition, display growth is weakening but still growing by nearly +17% in China. Chinese digital strength is supported by dominant local internet companies whose linked platforms between search, social media and e-commerce are just as sophisticated as those seen in global giants Google, Facebook and Amazon.

Australia, the third largest APAC advertising economy, grew by +3.4% in 2015 to $12bn. This was up from 2014’s 0.7% growth rate and 2013’s 0.9% growth rate. This growth was driven both by television recovering to flat vs. 2014’s -1.7% rate, but also by increases in the growth rate of radio and OOH. Australia is one of the most advanced advertising economies, with ad spend per capita just under $500, one of the highest figures globally. In addition, digital spend represents nearly 40% of total ad budgets. Unlike the US, where digital has not yet passed television as the largest ad spend format, in Australia digital became the largest part of ad budgets in 2013.

Elsewhere in APAC, the fastest ad growth of 2015 was seen in the Philippines (+17.9%) while the “dragon” economies registered little or no growth: Singapore (-1.6%), Malaysia (+1.0%), Taiwan (+1.1%) and South Korea (+1.1%). Television continues to weaken in APAC as it does around the globe, but in 2015 only three APAC markets out of sixteen will see shrinking television budgets. This spend continues to funnel towards digital media. Growth in digital is highest in Indonesia (+74%) and India (+49%). The weakest digital growth is seen in mature markets such as South Korea (+6.8%), Japan (+10.9%) and Australia (13.1%). Mobile share continues to increase and even the APAC market with the least mobile penetration in 2015 (Vietnam: 18%) sees nearly 1/5 of digital budgets shifting to mobile platforms. Hong Kong, on the other hand, sees nearly half of all digital spend (48%) going to advertise on mobile devices.
Latin America: this year +3.8%, next year +5.4%

While the Russia/CEE slowdown of 2015 was expected, the Latin America slowdown proved stronger than expected and affecting more markets than expected in our mid-year publication last June.

LATAM media owners advertising revenues increased by a modest +3.8% in 2015, down from last year’s growth rate of +7.2%. These growth rates now exclude Argentina and Venezuela, where hyperinflation is distorting regional growth: including Argentina and Venezuela, regional growth would be +8.8% i.e. below previous expectations and far below the growth rates the region was experiencing in the last ten years. The regional slowdown started in 2014 and turned worse in 2015; it is mainly caused by economic hardships experienced in several countries – primarily Brazil – and to a lesser extent by the negative comps effect created by the one-time booster of the FIFA World Cup hosted in Brazil last year.

The decrease in commodity prices and demand as well as significant depreciations of local currencies all contributed to a decline in the region’s economic activity: -0.3% in Real GDP change, according to the IMF). Ad spend is expected to re-accelerate in 2016 to +5.4%, helped by economic stabilization (real GDP +0.8%) and another major event hosted in the region: the 2016 Summer Olympics in Rio de Janeiro.

Brazilian ad sales, which account for 44% of total regional ad sales, grew by a modest to +4.4% in 2015, compared to 8% in 2014 and 12% in 2013. The country entered a severe recession (real GDP down 3%), which along with social unrest and political scandals, caused ad spend to decline. The difficult comparisons with the World Cup in 1H 2014 also didn’t help. This is extremely low growth in a country where consumer inflation stands at 9% and advertising was growing by double-digit most years in the past decade. Despite the continuing negative real GDP outlook, ad spend is expected grow by +5.0% in 2016, boosted by the Summer Olympics and positive comps effect.

Mexico’s advertising market took a large hit after high spending during the World Cup last year and a slower-than-anticipated economy this year, resulting in a growth of +0.3% in 2015. Growth is expected to reaccelerate in 2016 to +5.6%.  Andean markets, Chile, Peru, and Ecuador experienced decreases in ad sales this year as local economies slowed down due to lower demand and lower prices for commodities, and local currencies depreciating. The Copa America hosted by (and won by) Chile mitigated the ad spend to -0.7% while Peru and Ecuador experiencing larger declines (-2.1% and -3.1% resp.). In 2016, Chile will barely turn positive at just under 1% growth, while Peru will be significantly boosted by political ad sped to reach +4.4% and Ecuador will also recover at +4.3%.

TV remains the dominant media format in LATAM, with total spend share of 61%, remaining the highest of any global region and well above the global average (38.4%). Digital, on the other hand, remains small in LATAM at just over 17% of total spend, far below the global average this year (32%). It is growing rapidly from a small base (+16.5% growth in 2015) driven by strong growth in social media advertising (+35%) and video (+30.5%).
Digital Focus: Digital Media Will Outgrow TV by 2017

Digital advertising is the driving force behind growth in the advertising economy. Digital ad sales are expected to increase by +17.2% globally in 2015, while sales on traditional media formats declined by -2.0%. Digital formats thus now represent $160 billion globally, 32% of total ad sales, and will pass television as the largest media format in advertising revenues in 2017, i.e. one year earlier than previously expected.

Digital media is mostly driven by social (+44% in 2015) and video (+39%), although search (+15% growth) and display (+3% growth) continue to grow globally. Digital ad sales generated by mobile campaigns or impressions are increasing by +61% in 2015, following the rapid shift of media usage from desktop towards smartphones and tablets, while non-mobile ad sales barely grew (+3.7%). The growth of mobile is also driven by innovation in formats, gradually improving user experience while optimizing ad inventory, creating ever more attractive placement opportunities for advertisers. Mobile advertising is therefore expanding to represent a third of total digital spend today and this is forecast to grow to two-thirds by 2020.

The largest digital format remains Search which, despite maintaining a lower profile than trendy formats social and video, represents nearly half (48%) of digital budgets. Ad sales grew by +15% in 2015, with low single digit desktop growth compared to +55% mobile growth. Desktop search ad revenues are actually already declining in many developed markets. While search budgets are sometimes under pressure due to the growing competition of social, the format continues to evolve and re-invent itself. For instance, more ads have been added in Google Search results and the new RLSA (Remarketing Lists for Search Ads) options, which allows targeting based on not just device, language, location, daypart and keyword, but also from brand familiarity and specific audiences. Just like programmatic buying has boosted the growth of banner display and video in the last two years, more granular targeting and behavior-based retargeting has the potential to boost search efficiency and maintain strong interest for both direct response oriented and brand-oriented advertisers in years to come.

The second largest digital format remains banner display, representing 18% of total digital budgets. Banners keep losing market shares as sales growth has dwindled to just 3.1% in 2015 (+25% mobile and -1% in desktop sales). Desktop display is now shrinking in most established markets due to the competition of social and video. The banner format was fundamentally imported from the print environment into the digital environment when bandwidth did not allow video and digital-native formats (search, social) were only beginning, so it should not surprise us that it is now losing share. Additionally, of all digital formats, display is the most affected by ad blocking. The decline is not more severe is due to the fact programmatic technologies have buoyed banner display growth and new, better viewability standards have curbed CPM deflation. “Native” formats and in-app placement keep banners relevant in some environments, but static banner or “rich media” are simply being replaced by other formats including “outstream” embedded video.

Social Media ad sales grew by +44% to $23.7bn in 2015. Mobile usage and ad impressions are already dominating the format with 73% of total social spend this year, while desktop-based ad sales are already shrinking. Because all social media formats fall under the “social” line item in the MAGNA model, the rapid expansion of social video inventory and impressions also contributes to the rapid growth of ad sales.

Online video ad sales increased grow by +39% this year to $15.3bn (excluding social video). This is a combination of growth in developing markets from digital natives like YouTube, and also publishers in developed markets being aggressive with new video formats and video content creation. New video offerings from Yahoo and Snapchat, as well as incremental content being offered through Hulu or Amazon generate a huge amount of additional video ad inventory to meet the demand. Non-video sites (e.g. newsites) are also replacing banner by “outstream” video inventory. Higher viewability standards are being implemented in most developed markets to maintain the perceived value of the inventory. Video growth will continue to be strong, with growth over 25% or more expected for many years to come as ad spend still has not caught up with consumer viewing preferences for digital video.

Programmatic advertising is reshaping the way digital media inventory is bought and sold, and has helped to drive incremental spend across most display-related formats. The global value of display and video inventory transacted in a programmatic way will grow from $14.2 billion in 2015, to $36.8 billion in 2019. By 2019, programmatic transaction methods will represent more than half of spend in the Programmatic Universe (banner display and video) for the first time, up from 2015’s 31% share of total banner display and video. Growth in 2015 is expected to be +49% y/y, following 2014’s 64% global programmatic growth. The largest share of programmatic spend comes from desktop banner display inventory today, but by 2019 video will represent over half of all spend. The United States remains the largest programmatic market by spend in the world by far, representing over half of all global programmatic spend. It is followed by the UK, Japan, China and Germany. Together, these largest five markets represent just over three quarters of global programmatic spend.