Ukraine Conflict Cuts Global Ad Forecast

Zenith says World Cup and mobile are driving growth
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Photo by Sasha Maksymenko and used per Creative Commons license

ZenithOptimedia shaved its global ad forecast because of the unstable situation in Ukraine.

The media agency is now expecting ad spending to rise 5.4% to $524 billion in 2014, down a hair from its 5.5% forecast three months ago.

“The conflict in Ukraine has severely disrupted the local ad market, while Russia has suffered from sanctions imposed by the US and the EU, and a withdrawal of international investment,” the Zenith report said. “We forecast ad spend in Ukraine to shrink 32.5% this year, while Russian ad spend grows a relatively weak 6.9%. Overall we expect ad spend growth in Eastern Europe & Central Asia to fall by more than half to 5.5% this year.”

But throughout most of the rest of the world ad spending is showing health growth. Zenith forecasts that spending will rise 5.7% in 2015 and 6.9% in 2016.

This year, the World Cup will boost global ad spending by $1.5 billion, Zenith estimates. “We expect TV to benefit the most, but World Cup advertisers will spend more of their budgets on internet advertising, with advertisers more active on social media than during any previous sporting event,” the report said.

Zenith expects spending on television to rise, but for its share to start to decline. TV share has grown steadily from 29.9% in 1980 to $39.6% in 2013. In 2014, the agency sees TV’s share dipping to 39.4% in 2014 and 38.3% in 2016.

“This is not because advertisers are withdrawing from television – far from it, we expect television ad spend to rise at an average of 4.4% a year to 2016. But internet advertising is growing so much faster – at 16.2% a year – partly because it now offers credible brand-building alternatives to television,” the Zenith report said.

Zenith notes that programmatic buying allows advertisers to target traditional display ads accurately and efficiently. At the same time, online video offers high-quality content that viewers can watch whenever they want.

Mobile advertising on smart phones and tablets has taken off and is growing 5.5 times faster than desktop internet, Zenith says. The agency expects mobile advertising to grow by an average of 49% a year between 2013 and 2016.

Zenith says that online video offers broadcasters the opportunity to tap into the rapid rise of internet advertising. The agency sees video—broadcast and online—increasing its share of the global ad market to 41.3% from 41.2% in 2016. That share will fall back to 40.8% in 2016.

“Nevertheless, video advertising as a whole will remain the best way to build brand awareness and engagement for many years to come,” the Zenith report says.

“The World Cup is a great opportunity for advertisers to reach passionate and involved audiences worldwide. While television will remain central to how fans experience the competition, advertisers are using digital media more than ever before to help shape this experience. Over the next few years internet advertising will play an even greater role in supplementing the brand-building power of television,” Steve King, ZenithOptimedia’s CEO, Worldwide, said in a statement.

(Photo via Sasha Maksymenko’s Flickr. Image taken on March 10, 2014 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)

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