Following 3.8 percent growth in 2011, global advertising spending is expected to grow by 4.9 percent in 2012 to $465.5 billion, according to the latest Global Advertising Forecast from Strategy Analytics.
Although total US advertising spending is expected to increase by less than the global rate, at 2.7 percent this year – to $152.1bn – it is a significant improvement on the 0.6 percent growth in 2011. The US also underperforms Europe as a whole, which is expected to grow by 3.7 percent to $136.3bn in 2012. (See Chart 1)
Ed Barton, Strategy Analytics’ Director of Digital Media Strategies, explains, “Major global-impact events led by the Olympics, the US Presidential Elections and the European Football Championships, as well as Japan’s continuing recovery from the earthquake, combine to paint a brighter picture globally in 2012 for advertising spending overall. Furthermore, we expect that total ad spend will surpass half a trillion ($500bn) dollars in 2014.”
Global advertising by media type
Looking at spend by media type reveals that global TV advertising is expected to grow by five percent in 2012 to $188.5bn, equivalent to 40 percent of all global spending. Global print advertising is expected to grow by half a percent, accounting for a 26.4 percent share. Other traditional formats including cinema and radio will grow by approximately four percent.
In contrast, global online advertising is expected to grow 12.8 percent to $83.2bn in 2012, accounting for 18 percent of global ad spending (See Chart 2).
Barton says, “Online advertising will continue along its growth trajectory fuelled by strong growth in emerging markets and increased spending volumes on social networking and online video advertising.”
US/Europe advertising by media type
It is a similar picture in the US with online advertising leading the way. Online is expected to grow by 6.7 percent this year to $27.4bn compared to 3.7 percent for TV and 2.9 percent for other traditional formats. Print is expected to decline by 1.5 percent.
In comparison, online advertising across Europe is expected to grow by 11.7 percent this year compared to 3.4 percent for TV and 2.4 percent for ‘other traditional’ advertising. Print is expected to decline by 0.1 percent.
Barton notes, “The US continues to be a leader in terms of the share of revenue generated by TV advertising – its share in the US this year will be approximately 41 percent compared to 35 percent in Europe and 24 percent in the UK. In contrast, Internet advertising tends to have a smaller share of spending than in other markets. However, the share of advertising dollars allocated to the Internet continues to grow and is projected to overtake print advertising in the US in 2016 – a year ahead of when this is expected to happen for the total global market.”
Barton concludes, “Europe presents the sternest challenges to forecasting: structural macroeconomic issues based on unsustainable national and household fiscal deficits and the ever-present threat of a major shock in the form of a Eurozone default mean that the region is one defining incident away from all forecasting outlooks effectively being rendered irrelevant in a single stroke.
However, assuming that the Eurozone can build its way out of the current uncertainty, we are likely to see a situation characterized by some territories suffering a long term zero-to-negative growth environment where spending will remain very low (Spain, Greece, Italy, Portugal). Stronger Western European economies (UK, Germany, France) will grow slowly with the occasional boost from one off drivers such as major sporting events. Growth, albeit from lower spending volumes, is likely to come from Eastern and Central Europe (Turkey, Russia) and the ongoing growth trajectory of online formats, in particular online video and social networking.”
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