Online Advertising To Have Greater Share Of Marketing Budgets

    March 4, 2008

The worldwide TV advertising market is expected to see sluggish growth to 2009 but will see a rebound, mainly online, from 2010 to 2012 as TV audiences fragment and online advertising continues to grab a bigger share of marketing budgets, according to Screen Digest.

This year will be a challenging one for TV advertising, with spend growing at a lower rate than the economy at only 1.9 percent in Europe and 1.5 percent in the U.S. TV advertising will receive a boost from major events that occur every four years including the Beijing Olympics, the European football championship and the U.S. elections.

The benefits of those events will help avoid a recession for TV ad revenues but the effect will be temporary setting up a fragile advertising environment in 2009. Screen Digest predicts marketing budgets will be cut, especially in the U.S.

"Advertising spending tends to amplify economic cycles – and in some instances it actually anticipates downturns. Although we’re not expecting advertising budgets to be affected this year, thanks to the quadrennial eventswe’ll experience the real impact in 2009, which will be the toughest year for advertising revenues," said Vincent Ltang, Screen Digest Senior Analyst and author of the research.

The growth rate in 2011-2012 will be higher as the economy picks up after 2008/2009, at 5 percent in Europe and 6 percent in the U.S. The majority of this growth will come from online advertising, which is on track to grow on average by 17 percent every year until 2012.

Screen Digest says that by 2012 advertising will be a three tier market with the most being spent online, followed by TV in the middle and traditional media on the bottom. When both search and display are combined, online advertising will see double-digit growth every year to 2012.

"Whilst the overall picture for ad revenues is flat or in decline, two areas will enjoy growth – online will continue to grow at a pace, buoyed up by a strong search advertising market and digital TV channels will be taking a larger proportion of ad budgets by 2012, at the expense of the traditional broadcasters," said Ltang.