More than 25% of all media advertising this year will be digital !
Advertisers worldwide will spend US$545.40 billion on paid media in 2014, according to new data from eMarketer. Total media ad spending will increase by 5.7%, more than doubling its 2.6% growth rate from last year.
Several factors will be the triggers for this year’s increase in total media advertising spending. It’s not just about advertising related to the FIFA World Cup, and to a lesser extent the Winter Olympics, but there is a steady increase in online and mobile advertising as consumers are increasingly turning their attention to digital devices.
Based on individual countries, the USA is the absolute leader in total spending on media advertising. It is estimated that the US will spend $180 billion on advertising this year, or nearly one-third of the world’s total. This consumption is also the highest in the world per capita; US advertisers will spend nearly $565 per person on average on paid media in 2014 to reach every consumer in the country.
By comparison, advertisers in China will spend just $37.01 per person, even though the country’s large population makes it the second largest country in the world in total ad spending. Norway is the second-highest country in terms of advertising spending per person with USD 538.71. Australia is next in line at around US$504 per person. All other countries invest less than USD 400 per capita.
In the long term, digital channels will continue to see growth in advertising globally. Digital ad spending is estimated to grow 16.7% this year, totaling $140.15 billion and surpassing 25% of all media ad spending for the first time.
Within the digital category, advertising on tablets and “smartphones” continues to be a key point for growth. Mobile advertising spending will increase by 84.7% in 2014 and reach $32.71 billion this year, accounting for a quarter of all digital advertising spending (including paid media spending on ads of any format delivered to internet-connected devices).
In the most mature digital advertising markets, such as the US and the UK, for example, we expect mobile advertising to take the majority share of digital advertising spending in the near future. In the UK, mobile will account for around 70.4% of digital advertising spend by 2018, with the US close behind at 67.8%. In contrast, in emerging markets such as China, Indonesia and India, the share of mobile advertising spend will remain relatively low relative to overall digital spend over the forecast period.
This pattern of consumption in emerging markets may seem contrary to the common vision of many of these markets, where it is “mobile first” and where consumers are more likely to go online on their phones than on their home computers. Several factors are responsible for the lag in mobile ad spending: Many consumers still use feature phones and less advanced “smartphones,” and even though mobile adoption is massive, per capita income remains low in some emerging markets, with India being a prime example, so there isn’t much the market can offer them.
Further, there is a significant learning curve in the development of mobile advertising, and consumer smartphone infrastructure does not automatically translate into a functional advertising infrastructure. For some of these less developed markets, TV is still first for brands and advertisers.
But even as some markets lag behind, shifts to mobile in North America, Western Europe and parts of the Asia-Pacific mean that by the end of the forecast period, more than half of all digital advertising spending will be directed to mobile Internet formats.