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Digital challenges TV for ad dollars

News, 03 August 2015

RESTON, VA: Digital advertising is expected to overtake TV to become the top media category in the US in 2016, although the overall TV market is not expected to decline, a new report has forecast.

According to estimates by analytics firm comScore, and seen by CNBC, digital advertising is currently standing at about 80% of the value of TV advertising.

However, comScore calculates that digital will surpass TV next year on its current growth trajectory. US digital adspend amounted to $13.3bn in the first quarter of 2015, a year-on-year increase of 16%.

While accepting that internet will become the largest advertising platform worldwide next year, Warc's International Ad Forecast, released last week, does not align with comScore's findings for the US.

Both pieces of research recognise the $49.5bn of internet adspend in the US last year. However, Warc concludes that TV will remain the largest ad platform in the US by the end of next year, albeit marginally, with adspend approximately $700m higher than internet.

The 2014 internet total referenced by both comScore and Warc uses the IAB definition, incorporating digital revenues for news and magazine brands, as well as radio websites and broadcaster VOD.

Were the latter assigned to TV instead, TV's greater share of the US ad market would sit more comfortably than forecast.

Facebook, which announced that its second quarter revenue jumped 39% to $4.04bn with advertising accounting for $3.83bn of the total, is seen by comScore as the driving force behind the switch to digital advertising.

"It's going to be very interesting to see what happens going forward as Facebook monetises its video feeds more and more," said Gian Fulgoni, co-founder of comScore. "I think there are some tremendous opportunities for them."

According to comScore, mobile and video are the fastest-growing segments of digital advertising. The two channels, along with static banners and some other forms of display ads, secured revenue of £26bn in 2014.

Meanwhile, eMarketer has reported that Facebook will account for 16% of the global mobile ad market this year, second only behind Google. Overall adspend on Facebook is expected to increase by 35% this year to $15.5bn.

Data sourced from CNBC, eMarketer; additional content by Warc staff