• by Jack Loechner , Staff Writer @mp_research, July 2, 2015

“The Internet is quickly establishing itself as the dominant advertising medium, and on current trends will overtake (traditional) television by the end of the decade… “ says Steve King, ZenithOptimedia’s CEO, Worldwide… the amount of time viewers spend watching online video on their laptops, tablets and smartphones is increasing rapidly… advertisers are shifting their budgets online to follow them… “

ZenithOptimedia forecasts that advertising spending on traditional TV will be basically flat over the next three years, as spending on digital media, particularly video, is expected to climb. TV spending will rise 2% to $68.1 billion in 2016, an Olympic year, after a small dip in 2015. The report sees spending increasing negligibly in 2017.

TV dollars are expected to continue to shift from broadcast to cable, says the report. Broadcast network spending will slide from $15.7 billion in 2017 from $17.4 million in 2014 following a decline in ratings. Networks are continuing to focus on recapturing audiences across other screens, fueling growth of their digital and mobile business.

In its second quarter forecast, ZenithOptimedia forecasts that

• Spending on cable will rise to $24.2 billion in 2017 from $22.4 billion in 2014 as cable networks add more quality original programming to their lineups
• Syndicated TV is expected to hold relatively steady through 2017, while spot TV increases 1.5% in 2015, 3% in 2016, before staying flat in 2017.
• Across all media in the U.S., ad spending is expected to rise 3.7% in 2015, 4% in 2016 and 3.7% to $197.2 billion in 2017, says the report. The largest increases in spending for 2015 are all from the digital category, the report said, noting a 32% increase in social media spending and 26% for online video

The growth of digital video viewers continues to rapidly increase due to growing content, user acceptance, and consumers’ higher comfort level of watching video through multiple platforms, the report says. With growing digital video consumption, video ad spending is also up across all devices, with mobile devices seeing especially large growth largely due to millennials.

Some of that online video is traditional television content being viewed on digital devices. Inventory from television networks will grow but will still be limited in supply, which will prevent networks from packaging as much non-linear inventory as they might like in order to fulfill demand, the report says.

According to the report, the demand for digital video is bringing more players into the space. Leading digital partners (AOL, Yahoo!, Conde Nast) continue to develop quality video in order to capture video consumers. Taking note from YouTube’s increasing viewership, video content has shifted from professional, longer-form series to include snackable, short-form content built specifically for mobile devices to satiate consumer appetite through the day, says the report.

The Internet will be the biggest advertising medium in 12 key markets worldwide in 2017, the report says. Globally, the Internet's share of global advertising spending will be just 4 percentage points behind television in 2017, compared with an 11-point spread this year.

King concludes that “… the Internet is quickly establishing itself as the dominant advertising medium… on current trends will overtake (traditional) television on TV sets by the end of the decade… the amount of time viewers spend watching online video on their laptops, tablets and smartphones is increasing rapidly… advertisers are shifting their budgets online to follow them… “

For additional information, please visit here.