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Forecast: Digital Spending To Surpass TV In US Next Year, Globally By 2017
Search remains the dominant digital ad format by revenue.
According to a new global ad forecast, Magna Global estimates:
Digital ad sales are expected to increase by +17.2 percent globally in 2015, while sales on traditional media formats declined by -2.0 percent. Digital formats thus now represent $160 billion globally, 32 percent of total ad sales, and will pass television as the largest media format in advertising revenues in 2017, i.e., one year earlier than previously expected.
Television, the last traditional ad channel to hold out against the internet, is finally succumbing to digital. Audience fragmentation, cord cutting and over-the-top video services have diminished the once unassailable advertising medium. It’s also the case that many brands and agencies have cannibalized TV budgets to feed digital as audience data show users flocking to other screens.
According to Magna Global, digital spending will reach $160 billion next year. By contrast, TV advertising will account for roughly $190 billion in 2016. The following year, according to the forecast, their positions will switch.
Other firms peg the crossover in 2018 or later, as indicated. However, nobody disputes it’s going to happen soon. In the US market, Magna Global estimates that digital will surpass TV even earlier, in 2016.
Digital ad spending growth is being driven by social media and video, according to the forecast. Search and display (other than mobile) are growing more slowly because they’re more mature. Yet paid search remains the dominant digital format by revenue, representing nearly half of digital ad budgets:
The largest digital format remains Search which, despite maintaining a lower profile than trendy formats social and video, represents nearly half (48 percent) of digital budgets. Ad sales grew by +15 percent in 2015, with low single digit desktop growth compared to +55 percent mobile growth. Desktop search ad revenues are actually already declining in many developed markets. While search budgets are sometimes under pressure due to the growing competition of social, the format continues to evolve and reinvent itself.
The migration into digital is a mixed blessing for marketers. While digital media can be precisely targeted and measured in ways that are more challenging when it comes to TV, most digital formats are subject to ad blocking, fraud or viewability issues — though not search.