The U.S. is on track to see its biggest ad spending jump in a decade next year, fueled by a significant increase in digital ads. Media buyer and research firm Magna says a third of ad dollars next year will go to digital channels, outpacing TV by 2017.
In a report issued on August 26, Magna cut its forecast for U.S. advertising revenue growth this year to 5.1% from 6%. While the first half of the year failed to meet expectations in part due to weak spending on the Olympics and political ads, outlays are expected to bounce back in the second half of the year.
But that’s not all. In 2015, spending is set to take off, projected to hit its highest rate in a decade on the strength of digital ad buys.
Despite the lower numbers from the Olympics and political campaigns this year, U.S. ad growth is expected to be 3.5% this year, down from the previously forecast 3.9%, and a decrease from last year’s 4.4% growth rate.
Here’s a look at the numbers:
- Even though digital is expected to overtake TV in the next few years, TV ad purchases are still expected to grow 2.2% this year.
- Newspaper and magazine ad revenue are expected to decline 8.9% and 11%.
- Digital ad revenue is expected to go up 17% this year to $50 billion.
- Radio sales are expected to fall more this year than last, losing 3%.
- Outdoor media sales growth is slowing to a projected 1.7%, weaker than it has been in recent years.
The World Cup tournament in June and July provided a bright spot after a slow second quarter but wasn’t enough to offset a sluggish Winter Olympics.
TV took an especially strong hit, particularly English language broadcasters. Explosive growth in online video, which grew 15% in the second quarter, hit traditional TV ad spends particularly hard, with advertisers moving funds to the new medium.
The quarter is a harbinger of things to come next year and in the near future:
- Going forward one in three ad dollars next year is expected to be spent on digital media.
- Digital media is projected to grow 16% in 2015, up from its 13% growth this year.
- Digital media is projected to outgrow TV by 2017, when revenues will reach $72 billion compared with TV sales of $70.5 billion.
Smart marketers are increasingly moving away from the traditional apex of TV marketing to explore new ways to deliver their message via digital channels. As more marketers pile into TV alternatives, expect to see prices continue to climb, making smart advertising dollar allocation even more important.