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US adspend growth slows

News, 28 March 2016

NEW YORK: Despite the quadrennial boost of the Olympics and a presidential election, US advertising expenditure will grow more slowly in 2016 than previously expected, according to eMarketer.

New figures from the insights provider indicate that paid media spending will reach $192bn this year, representing a 5.1% increase on 2015.

Macroeconomic conditions, such as global market uncertainties and falling oil prices, are one factor in the reappraisal. Another is the continuing shift in consumer behaviour, away from traditional to digital media consumption.

"The outlook for TV advertising growth is lukewarm," said eMarketer, as linear viewing declines and competition from video-on-demand and digital streaming services increases.

Accordingly, it foresees TV adspend growing just 2.5% in 2016 to $70.6bn, and that largely on the back of the US presidential election and the Rio Olympics.

Digital spending is slated to overtake TV during 2017, and the scale of the transformation taking place in the industry becomes even more clear when one considers that in four years' time mobile – which currently accounts for just over half of digital spending but will take almost three quarters by 2020 – will have more than doubled and will be on a par with TV spending at $77.1bn.

For now, however, TV remains the largest single media category in the advertising market and will account for 36.8% of total media ad spending in 2016, just ahead of digital on 35.8%.

By 2020 digital's share will have leapt to 44.9%, valued at $105.2bn, while that of TV will have fallen to 32.9%.

Over the 2016-2020 period most other media will remain static or decline. Spending on print, for example, will fall from $26.7bn to $25.9bn, while its share of media expenditure will drop from 15.4% to 11.1%.

Radio and out-of-home will increase only slightly, from $14.1bn to $14.2bn in the case of the former, from $7.5bn to $7.9bn for the latter.

Data sourced from eMarketer; additional content by Warc staff