Television has lost its longtime grip on advertising budgets as digital ad spending continues to surge, according to some of the advertising industry’s most closely watched forecasts released yesterday.
Television ad sales are expected to fall slightly this year, decreasing globally for the first time ever aside from a recession year, according to Interpublic Group’s Magna Global.
TV is to account for 38.4 percent of the US$503 billion global ad market this year and is set to drop to 38 percent of the market next year, according to the forecast.
In the meantime, digital media continued its meteoric rise. Digital ad spending is to grow 17.2 percent this year to nearly US$160 billion and another 13.5 percent next year, allowing it to overtake TV as the biggest advertising category by the end of 2017, the forecast said.
Publicis Groupe’s ZenithOptimedia expects digital media to pass TV in 2018.
“TV global growth is diminishing,” Magna Global head of global forecasting Vincent Letang said. “In most major developed markets, TV growth is slowing and in some cases stagnating.”
The annual advertising forecasts are likely to be closely watched by media executives and those on Wall Street after a year marked by volatility in top media stocks. The predictions could intensify brewing anxiety about the fate of traditional media in an increasingly digital world, with the unstable advertising market compounding fears of cord-cutting and declining TV ratings.
The companies presented their forecasts at the UBS Global Media and Communications Conference in New York yesterday.
In the US, Magna Global predicts digital media will overtake TV as the No. 1 advertising category next year, with nearly US$68 billion in ad sales compared with US$66 billion for TV.
The prospect that online and mobile platforms would capture more ad dollars than TV became inevitable in the past several years. Until recently, advertisers were dipping into their print budgets to feed their digital ad purchases, but ad dollars are now flowing from TV to digital, ZenithOptimedia head of forecasting Jonathan Barnard said.
“Over the last year or so, that’s really been the first time we’ve seen money specifically coming out of TV and going onto digital,” Barnard said. “We’ve been hearing about the loss of revenue from TV to digital for a long time, but the last year has been when it’s been fairly visible.”
In particular, ad dollars are now flowing faster into online video, social media and mobile. ZenithOptimedia predicts mobile ads will account for 50.2 percent of Internet advertising in 2018, surpassing desktop ads for the first time.
That shift in ad dollars to online and mobile has led to what Letang calls “digital deflation” — the ads are typically cheaper and as ad dollars move to digital, there is pressure on media sellers to cut their ad prices. As a result, growth in the overall ad spending market is slowing.
Magna Global estimates that ad sales in the US will increase 5.2 percent next year to US$176 billion, but when ads for non-annual events like the Olympic Games and the US presidential election are stripped out, the pace of growth in ad sales is to slow to 3.3 percent next year from 3.8 percent this year.
Overall, Magna Global predicts that global ad spending will grow by 4.6 percent to US$526 billion next year, while ZenithOptimedia sees an increase of 4.7 percent to US$579 billion. WPP’s GroupM has cut its growth estimate to 4.5 percent, from 4.8 percent, to US$520 billion.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to