Television has lost its longtime grip on advertising budgets as digital ad spending continues to surge, according to some of the advertising industry’s most closely watched forecasts to be released on Monday. Television ad sales are expected to fall slightly this year, decreasing globally for the first time ever aside from a recession year, according to the Interpublic Group’s Magna Global.
TV will account for 38.4 percent of the $503 billion global ad market this year and will drop to 38 percent of the market in 2016, according to the forecast.
The annual advertising forecasts are likely to be closely watched by media executives and those on Wall Street after a year marked by volatility in top media stocks. The predictions could intensify brewing anxiety about the fate of traditional media in an increasingly digital world, with the unstable advertising market compounding fears of cord-cutting and declining TV ratings.
The companies plan to present their forecasts at the UBS Global Media and Communications Conference in New York on Monday.
In the United States, Magna Global predicts, digital media will overtake TV as the No. 1 advertising category in 2016, with nearly $68 billion in ad sales compared with $66 billion for TV.
The prospect that online and mobile platforms would capture more ad dollars than TV became inevitable in the last several years. Until recently, advertisers were dipping into their print budgets to feed their digital ad purchases. But ad dollars are now flowing from TV to digital, said Jonathan Barnard, the head of forecasting for ZenithOptimedia. “Over the last year or so, that’s really been the first time we’ve seen money specifically coming out of TV and going onto digital,” he said. “We’ve been hearing about the loss of revenue from TV to digital for a long time, but the last year has been when it’s been fairly visible.”
In particular, ad dollars are now flowing faster into online video, social media and mobile. ZenithOptimedia predicts mobile ads will account for 50.2 percent of Internet advertising in 2018, surpassing desktop ads for the first time. That shift in ad dollars to online and mobile has led to what Mr. Letang of Magna Global calls “digital deflation”: those ads are typically cheaper, and as ad dollars move to digital, there is pressure on media sellers to cut their ad prices. As a result, growth in the overall ad spending market is slowing.
Magna Global estimates that ad sales in the United States will increase 5.2 percent in 2016, to $176 billion. But when ads for nonannual events like the Summer Olympics and presidential elections are stripped out, the pace of growth in ad sales will slow to 3.3 percent in 2016 from 3.8 percent this year. Over all, Magna Global predicts that global ad spending will grow by 4.6 percent, to $526 billion in 2016, and ZenithOptimedia sees an increase of 4.7 percent, to $579 billion. WPP’s GroupM cut its growth estimate to 4.5 percent, from 4.8 percent, to $520 billion.
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