Advertising Forecasts 2016: Digital Ads to Outpace TV Ads

Magna Global Predicts That TV ads will lose their value in the coming years[/caption]

Marketers need to rethink and re-evaluate their advertising budgets and strategies, as digital ad spending will very soon tower above television ads.

Annual reports focusing on audience trends and media values will be reviewed at the UBS Global Media and Communications Conference in New York on Monday. Where agencies like Magna Global and Publicis Groupe’s ZenithOptimedia will be discussing some of the advertising industry’s most closely watched forecasts.

TV Ad Sales on a Global Decline

“Television ad sales are going to lose value in an increasingly digital world,” states Interpublic Group’s Magna Global.

Predicting the future of ad effectiveness, Magna Global has mentioned [as seen in NY Times] that television advertising, which accounted for 38.4 percent of the $503 billion global ad market this year, will drop to 38 percent of the market in 2016. Whereas, the digital media spending on ads will witness a growth of 17.2 percent this year; and 13.5 percent in the year 2016. It is expected to overtake TV as the biggest advertising category by the end of 2017.

However, ZenithOptimedia expects digital media to pass TV in 2018. Jonathan Barnard, head of forecasting for ZenithOptimedia said, “We’ve been hearing about the loss of revenue from TV to digital for a long time, but the last year has been when it’s been fairly visible.” According to him, the ad dollars are now flowing faster into online video, social media, and mobile. His agency predicts that mobile ads will account for 50.2 percent of internet advertising in 2018, surpassing desktop ads for the first time.

Digital Media Promises More Functionality

Vincent Letang, head of global forecasting at Magna Global, has said that in TV, global growth is diminishing. “In most major developed markets, TV growth is slowing and in some cases stagnating,” he added.

If talking about the United States specifically, Magna Global predicts that digital media will overtake TV as the number 1 advertising category in 2016, with nearly acquiring $68 billion in ad sales compared with $66 billion for TV. The global agency further estimates that ad sales in the United States will increase 5.2 percent in 2016, to $176 billion. But when it comes to ads for non-annual events, the pace of growth in ad sales will slow to 3.3 percent in 2016 from 3.8 percent this year, when leaving aside the Summer Olympics and presidential elections.

Going by the out-and-out forecasts, Magna Global predicts that global ad spending will grow by 4.6 percent, to $526 billion in 2016, while ZenithOptimedia sees an increase of 4.7 percent, to $579 billion. At the same time, WPP’s GroupM cut its growth estimate to 4.5 percent, from 4.8 percent, to $520 billion.

Who All Will Be Tracking the Annual Forecasts

The varied predictions have intensified brewing anxiety about the fate of traditional media in an increasingly digital world. In addition, media executives as well as those on Wall Street are set to closely monitor these annual advertising forecasts so that they could make smarter and more effective media investments in the unstable advertising market.