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US digital tipping point nears

News, 09 December 2014

NEW YORK: Digital's share of global advertising expenditure will reach 30% in 2015 according to a new report which also forecasts it will overtake TV in the US in 2017.

The 2015 Global Advertising Revenue Forecast from media investment agency Magna Global predicted that global ad revenue would increase 4.8% next year to reach $536bn. Digital is one of the fastest growing sectors, Advertising Age reported, up 17% in 2014 to a total of $142bn, with growth of 15% projected for 2015.

"TV is the leading branding medium and digital has gotten so big that any further growth in digital spend has to be partly fuelled by budgets shifted away from TV," according to Vincent Letang, director of global forecasting for Magna Global.

"Most of that goes into video in the first stage, which is now a natural alternative/complement to many TV campaigns," he said in remarks reported by Ad Exchanger.

The signs of change were evident in the figures for TV ad revenue, up 4.8% in 2014 in the US, well behind Magna's earlier prediction of 8.6% growth. "The shift to digital is having a deflationary impact on the entire market as digital formats, whenever comparable to traditional format, look cheaper and therefore erode the pricing power of traditional media categories," the report said.

Within digital, paid search is the leading format, accounting for almost half of all spending, followed by display (21%), social (12%) and video (8%). Mobile spending continues to grow rapidly and is expected make up one third of digital revenues by 2016.

Ad Exchanger also noted that certain verticals, such as CPG and pharmaceuticals, were increasing the share of digital in their overall media mix with some leading companies going so far as to build in-house programmatic capabilities.

Among the other media categories, print's downward trend showed no signs of stopping as Magna reported declines of 4.3% this year for newspapers and 7.3% for magazines. Radio was flat but out-of-home registered a 3.4% increase in 2014.

Data sourced from Advertising Age, Ad Exchanger; additional content by Warc staff