Soccer and Economic Improvement Drive Ad Revenue Growth, Forecast Says

Magna Global Revises North American Ad Spending Upward

By Published on .

Global ad revenue is expected to expand more in 2014 than in any year since 2010, driven by strengthening economies and major events like the World Cup and the Winter Olympics, according to a new forecast by Magna Global. part of Interpublic Group of Cos.' Mediabrands.

Worldwide ad revenue will grow 6.4% to $516 billion, Magna Global said in the forecast, leaving unchanged its top-line global prediction from December. Ad spending grew 4.2% in 2013, Magna Global said.

The report boosted Magna's projections for the U.S., Canada, U.K., and Brazil, however, while lowering forecasts for six other major nations including China and Russia. All of the revised nations are still expected to show growth.

After years of declines, Western Europe will increase its ad spending by 2.2% this year, partly because of growth in the TV market. The region has stabilized over the past year after ad prices dropped in many markets.

China overtook Japan last year as the second largest media market in the world, Magna Global said. Along with the U.S., it's expected to account for nearly 50% of the global growth in 2014.

Globally, stronger economic growth is a key driver for the increase in ad spending. GDP is expected to rise 3.6% this year compared with 3.0% last year, according to the IMF's April 2014 report.

Soccer is also helping boost the numbers. The World Cup and other events like the Winter Olympics are increasing marketing and advertising activity, especially for TV, alongside spending related to the U.S. midterm elections, the Affordable Care Act, and the general elections in India.

Meanwhile, digital media spending is expected to increase by $20 billion this year to $140 billion, or 27% of the global market, the report said. Much of that is due to mobile, which will grow 61% this year compared with 9% for non-mobile formats.

"The only losers in that picture are other traditional media categories, that are losing market share at an accelerated rate," Vincent Letang, exec VP-director of global forecasting at Magna Global, said in a statement.

North America
Magna's report also forecasts a 6% increase in North American spending, to $168 billion. The earlier forecast in December anticipated a more modest increase of 5.5%.

The midterm elections and the Winter Olympics are the key drivers of this upward revision, along with the World Cup and some sizable spends by insurance companies, healthcare institutions and local governments, which had to communicate about the implementation of the Affordable Care Act.

Nested within these large numbers were another round of healthy digital forecasts. The Magna Global report expects North American digital advertising revenue to grow 14.4 % this year, with mobile and social at the heart of these expectations; mobile ad revenue is expected to grow 110%, and social media ad revenue is expected to grow 53%.

Though it's still behind TV as a whole, digital achieved a North American market share of 27% in 2013, according to Magna Global. It surpassed national TV's market share for the first time, and it's expected to surpass TV as a whole by 2018. Magna expects North American TV ad spending to jump 8.3% percent, compared to a decline of 0.6% in 2013.

Most Popular
In this article: