Canada is expected to tumble from ninth to 11th in the list of global ad spend leaders by 2016, according to the latest forecast from media agency ZenithOptimedia. It will be pushed out of the top 10 by Indonesia and South Korea.
The report is otherwise bullish on its predictions for Canada, calling for ad spending to grow 3.5% to $11.5 billion in 2014. That will be followed by 4.1% growth to $12 billion in 2015, and 4.3% growth to $12.5 billion in 2016.
The report says that current conditions—including greater global economic stability that is contributing to growing exports, growing momentum in the U.S. and a weaker Canadian dollar—are supporting a two-and-a-half-year high for Canadian business.
On a media-by-media basis, Zenith is calling for digital advertising expenditure to grow 12% in each of the next two years, with display and search performing slightly ahead of that pace and classified and email advertising remaining flat.
Mirroring global trends, the report calls for video and mobile investment to grow between 25% – 30% per year during the report period. The report says that mobile, which attracted almost $250 million in ad spending last year, will attract $500 million by 2016 as connectivity becomes “increasingly pervasive.”
Investment in newspapers dropped 18% last year, while magazine investment fell 2.8%. The report says the transition to digital publications is “irreversible,” with ad revenue continuing to follow consumer behaviour.
Online and on-demand video are also slowly eating into conventional broadcast revenues, which are projected to fall to $2.05 billion this year and will dip below $2 billion ($1.97 billion) by 2016. Specialty TV continues to drive the Canadian broadcast business, with revenues projected to grow to $1.3 billion this year and $1.4 billion by 2016.
Internet and TV were in a virtual tie for share of the total Canadian advertising pie last year, controlling 30.8% and 30.4%, respectively. Newspapers and radio control 14.8% and 14.4%, respectively, while magazines controlled 5.1%, and out-of-home boasted a 4.4% share.
Out-of-home and radio continue to perform their offline brethren as the economy and retail spending improve. The expansion of digital inventory in both indoor and outdoor continues to generate what the report describes as “modest” growth for the medium.
On a global basis, the combination of a stronger economy, the spread of programmatic and the rapid rise of mobile is expected to push ad spending to its pre-financial crisis growth rates.
The report projects global ad spending to increase 5.5% in 2014, bolstered by three major events: the Winter Olympics, the FIFA World Cup and the U.S. mid-term elections. Advertisers are also gaining in confidence as growth returns to the Eurozone, which the report said appears more stable and less likely to deliver more “negative shocks” to the world economy. The forecast is projecting growth of 5.8% in 2015 and 6.1% in 2016.
The report says advertisers are in a “strong position” to invest in expansion, with large cash reserves and high profitability.
The internet is still the fastest-growing medium by some difference says the report, with 16% annual growth from 2014 to 2016. Display is the fastest-growing sub-category, with ZenithOptimedia calling for 21% growth yearly through 2016.
Traditional display, including banners and other standard formats, is growing at 16% a year, with programmatic—which is providing advertisers and agencies with more control and better value—playing a significant role in its growth. Programmatic is also helping sustain the rapid growth of both social media (growing at 29% per year) and online video (23% per year).