February 18, 2016
This analysis is by Bloomberg Intelligence analysts Geetha Ranganathan, Paul Sweeney, Sean Ford, Jitendra Waral and Alex Wisch. It first appeared on the Bloomberg Terminal.
After a year of cord-cutting, will the Olympic Games lure viewers – and advertisers – back to their TVs? Who will be victorious in the battle for online video viewers: YouTube or Facebook? Bloomberg Intelligence’s experts look at what’s coming this year for the $550 billion global advertising industry.
Photo credit: Costa Anastasakis/Bloomberg
Olympics, elections bump ads
- Global ad growth is expected to reach 4.7% next year, higher than the 4% average since 2011, as 2016 gets a boost from the Rio de Janeiro Olympics and the U.S. presidential elections.
- These events, which occur every four years, add 1-1.5% to the $550 billion industry.
Photo credit: Chris Ratcliffe/Bloomberg
Digital poised to overtake television as biggest U.S. ad medium
- Digital media is expected to become the top U.S. advertising medium in 2016, upstaging TV for the first time, with Magna Global projecting online ads to reach $66 billion.
- The TV market has been under pressure, with weak sales in the upfront market as advertisers held back. Poor TV ratings have contributed, as viewers consume more content outside the traditional TV ecosystem, leading to lower ad gains.
Photo credit: Johan Jeppsson/Bloomberg
Mobile ads to surpass desktop, exceed $100 billion in 2016
- Global mobile advertising is expected to surpass desktop ads as it becomes a $100 billion market in 2016, according to eMarketer. The majority of that growth will be driven by the U.S. and China, which together will account for 62%.
- In the U.S., mobile ads may reach $42 billion, accounting for 63% of total digital ads as adults spend more time with mobile devices.
- China may see a 58% jump in mobile ads to $22 billion, while the U.K. will be the third-biggest market with $7.2 billion, followed by Japan’s $5 billion.
Photo credit: Chris Ratcliffe/Bloomberg
YouTube, Facebook capture online video ads in shift away from TV
- U.S. online video ads may jump 42% to $9 billion in 2016 as TV commercials rise 4.5% to $65 billion, thanks to political and Olympics ads, Magna Global forecasts.
- Online video is one of the fastest-growing ad categories within digital, rising about 31% annually versus social media’s 26% and a 12% gain in search.
- While Google’s YouTube is the dominant leader in video, Facebook’s video views are also rising rapidly. The latter may reach 2 trillion in 2015 versus YouTube’s 3 trillion, according to an Ampere Analysis report.
Photo credit: Qilai Shen/Bloomberg
$30 billion agency review tsunami forces big four to defend turf
- An unprecedented number of account reviews, with $25 to $30 billion in question, is forcing agencies to defend accounts amid intense competition. The reviews are partly triggered by the rebate debate and pressure on campaign metrics.
- Agencies said that reviews may not have a 2015 impact, though they have spent time and management efforts defending businesses. The trend may not change through 2016, with accounts shifting between big ad groups, possibly putting downward pressure on pricing.