Brands will spend more on social media and online video ads in the future

The amount of money companies spend on advertising is expected to dramatically increase over the next five years in large part because of social media-based campaigns and internet video advertising, according to a newly released report.

Posted on Dec 5, 2012 by YuMe

The amount of money companies spend on advertising is expected to dramatically increase over the next five years in large part because of social media-based campaigns and internet video advertising, according to a newly released report from marketing consultants ZenithOptimedia.

The growth in internet ad spending will come primarily at the expense of print-based campaigns. The report predicted that the amount spent on online campaigns will rise more than 14 percent during 2013, while spending on ads appearing in traditional media format like newspapers and magazines will increase by less than 2 percent next year.

Over the past 15 years, internet advertising has become one of the best ways to reach an audience, as the report showed that from 2002 to this year, the amount of global ad dollars going toward the web rose 15 percent, while the percentage of spending on newspapers declined 12 percent.

This discrepancy between print and the web is likely to grow wider, the report predicted. Newspaper and magazine ad spending should decline by about 1 percent year-over-year. In contrast, internet advertising will have comprised about 18 percent of the global ad market by end of this year, and should account for more than 23 percent of the marketplace worldwide by 2015. Online advertising will outnumber newspaper ads next year, and it is expected that there will be more web-based spots than all print ads combined three years from now.

"Advertisers are willing to increase their budgets wherever they can achieve a strong return on investment," said Steve King, global chief executive officer for ZenithOptimedia Group, according to MarketingProfs. "This means that developing markets, social media, and online video are all growing rapidly, supporting continued expansion in global ad expenditure despite stagnation in the Eurozone."

The growth of social media and internet video advertising
From 2012 to 2015, about 59 percent of total expenditure will come from online ads, and that growth will be driven primarily by display advertising and online video ads. Over the next three years, the report anticipated that more than 42 percent of global spending will go toward online video.

Brands in 2015 will also be interested in social media advertising, as the study found that ads on social networking websites will likely increase by 35 percent next year and by 32 percent in 2015.

While mobile will not account for the majority of the online ad industry's expected future growth, the study reported that the sector will have one of the most dramatic increases between now and 2015. Advertising on mobile devices is expected to have risen by 58 percent over this past year.

"There is intense marketplace competition to develop new platforms and advance existing ones in an effort to drive scale and improve effectiveness," ZenithOptimedia's forecast said, according to AdAge.

Top ad markets
Brands with a global reach should expect to have plenty of competition in North America, as the report predicted that this region will see the most amount of money spent on advertising. Of the $518 billion that will be spent on ads worldwide next year, more than $177 billion will be directed toward North American consumers. In 2014, the amount of money going to campaigns on the continent will have increased by around 4.4 percent.

However, the fastest growing ad market is the Asia-Pacific region, the study said. This year, the amount of money spent by brands trying to appeal to customers in this part of the world will surpass total ad spending in Western Europe. By 2015, the year-on-year growth rate for total ad spending in the Asia-Pacific region excluding Japan will be more than 9 percent.

Although global fiscal issues such as potential Middle Eastern conflicts, the Eurozone economic crisis and the impending U.S. fiscal cliff could dramatically derail the forecasts, ZenithOptimedia still predicted that ad spending worldwide will rise considerably over the next three years.