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Report: Internet to Overtake TV by 2020

8 Jul, 2015 By: Doug McPherson

LONDON – A new report from media services company ZenithOptimedia says the Internet is quickly establishing itself as the dominant advertising medium and will overtake traditional television by the end of the decade.

“The amount of time viewers spend watching online video on their laptops, tablets and smartphones is increasing rapidly [and] advertisers are shifting their budgets online to follow them,” says Steve King, ZenithOptimedia’s CEO.

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

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.

Other ZenithOptimedia forecasts say 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 percent in 2015 and 3 percent in 2016, before staying flat in 2017.
  • Across all media in the U.S., ad spending is expected to rise 3.7 percent in 2015, 4 percent in 2016 and 3.7 percent – to $197.2 billion – in 2017, says the report. The largest increases in spending for 2015 are all from the digital category, the report says, noting a 32-percent increase in social media spending and 26 percent for online video.
  • 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.

The report says growth in digital video viewers continues because of growing content, user acceptance, and consumers’ higher comfort level of watching video through multiple platforms. 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.

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

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