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Ad Trends

Online Ad Spend Bears Down On TV

Television advertising has remained relatively resilient to the rise of the internet, which has been taking advertising from every other medium as people spend more time online.

Now, television is facing the same challenge, at least in developed markets where online can compete with TV on mass reach.

Analysts at Magna Global, the forecasting and media intelligence arm for Interpublic Group (IPG), called 2015 the tipping point in the long-term shift from traditional to digital media.

“This year, traditional media ad revenues will decrease globally (-0.8%) for the first time since the 2008-2009 recession, as low growth of television and out-of-home ad sales will no longer offset the fast decline of print (-6.5%), challenged by a diversified family of digital media categories (+15.9%),” wrote Magna’s director of global forecasting, Vincent Letang, in the company’s latest report. 

“Beyond the slowdown caused by the absence of global events in 2015, we believe digital media has reached a stage where it starts to compete more directly with traditional TV budgets,” he added.

ONLINE VIDEO VELOCITY

Magna counts online video, an increasingly important source of viewing for traditional broadcast companies as well as OTT only rivals, as a small but fast growing digital medium.

Online video advertising, across desktop and mobile, rocketed up by 46.4% last year, and is on course for another 37.6% boost this year to represent ~US$15.4 billion in net spend worldwide, according to Magna’s numbers.

That gives online video a 3% share of all ad spend in 2015, compared with 38.6% for traditional TV.

The separation makes sense, Magna analysts argue, because most advertisers still have separate budgets for the two formats, rather than adopting a video agnostic approach.

“While we’ve heard about some movement in this direction, I expect it will be many years before that mental switch is made,” Magna’s associate director of forecasting, Luke Stillman, tells Media Business Asia.

Digital meanwhile continues to march forward, driving global advertising at the expense of traditional media.

Online is already the biggest ad medium in 13 countries around the world, adding 10 more before it passes TV to become the biggest ad medium in the world sometime in 2018, according to Magna forecasts.

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