Magna Forecast: Internet, Led By Mobile, To Pass TV Ad Sales.

Driven by mobile, social and video, the internet has surpassed television as the No. 1 category for ad spending. According to a new Magna Global forecast, digital media will represent 40% of total global ad spend this year, while television claims 36%. And within digital, mobile emerges as the dominant force, commanding 54% of all digital ad spend.

Overall, Magna expects worldwide advertising sales to grow 3.7% to $505 billion in 2017, down from last year’s record 5.9% increase but in line with Magna’s earlier projections. However, 2016 spending was lifted by the U.S. presidential election and global sporting events, including the Rio Summer Olympics, and Magna notes that accounts for much of the decline in spending this year.

In the U.S. market, Magna forecasts ad spending will grow 1.6% to $185 billion this year, a marked slowdown from about 8% growth last year. However, without the even-year events in 2016, the difference is less severe, with 2017 expected to be up 3.4% compared to 5.9% growth in 2016.

“The record level of growth in 2016 globally, outperforming economic growth, was caused by marketers willing to embrace the new opportunities offered by digital media (search, social, video, programmatic) on a larger scale, while anxious to preserve their share of voice on traditional linear television, despite rising CPMs costs,” Vincent Létang, executive VP, Global Market Intelligence said in the report.

Overall, traditional media will slip 2% this year, down from a flat year in 2016, while digital media ad spending grows 14%. (Magna’s forecast for traditional media companies does not include any revenue from their digital extensions.)

Among individual categories, television spending is expected to fall 1% this year after a 3.3% rise in 2016. “This is due to the lack of cyclical sports events, which impacted spend from the automotive, beverage and finance sectors, as well as the long-term erosion of viewing and ratings now taking place or accelerating in an increasing number of markets,” the report details.

Broadcast radio is expected to dip 2% worldwide, however Magna’s forecast does not include spending on radio companies’ digital extensions, which is a growing area and a bright spot for radio broadcasters seeking to generate new revenue streams.

Magna notes that advertisers are investing money in streaming audio and other audio digital formats.

Radio’s digital billings for U.S. broadcasters are expected to rise 17 times faster than over-the-air revenues, according to a separate forecast by BIA/Kelsey, which said radio digital would grow 8.4% this year, while over-the-air ticks up just 0.5%.

While Magna expects TV and radio to slip a bit this year, it is calling for print media to experience more drastic losses. Magna sees global print newspaper ad spending down 10% and print magazine slipping 9%. Out-of-home, which Magna describes as a “resilient” category, is expected to be up 4%, in line with the last eight years.

Within digital, Magna says mobile, social and video are all growth engines. Mobile advertising will be hit $110 billion this year, an all-time high, and represents more ad spending than print and radio combined. Video ad spend is expected to grow 30% this year, while social jumps 32%.

In the U.S., Magna says total advertising sales will grow by 1.6% this year to reach $185 billion. The U.S. market is off to a modest start with Q1 2017 up 2.3% and all traditional media channels were either down or flat. Magna says the Q1 2017 billings have likely been adversely impacted overall by economic slowdown in the U.S. with real GDP growth just 1.2% in Q1 2017 compared to 2.1% in Q4 2016 and 3.5% in Q3 2016.

Among ad categories, Magna notes that several major ad categories have reduced their spending this year, impacting all media companies. So far this year, automotive, food and beverage, pharmaceuticals and retail are all either down or flat.

Drilling down into U.S. broadcast radio (again, not including radio digital revenue), Magna says terrestrial radio ad spending is also off to a slow start this year, with auto spending down 14%, finance off 9% and restaurants off 12%. Overall, broadcast radio ad sales are down 4% in the quarter and Magna says 2017 spending will likely decline 4.4% to $13.4 billion in billings and repeat similar declines next year.

U.S. digital media ad sales will increase 14% to $83 billion and account for 45% of total media spend. Mobile will grow 34% to $48 billion and represent a 58% share of total digital ad spend.

U.S. print ad sales will decline 13% to $18.1 billion, while local TV stations, which were the main beneficiary of 2016 political spending, will fall 13% to $20 billion this year.

If overall U.S. ad spend in 2017 remains in line with Magna’s projections, the agency says it will be the slowest growth in ad spend since 2008. Looking ahead to 2018, Magna expects the ad market to rebound and grow 4.8%, thanks in part to midterm elections and the 2018 Winter Olympics, which should both generate significant ad spending in the U.S.


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