BANFF –
So said PwC partner Michael Paterson, in presenting Price Waterhouse Coopers’ Global Entertainment and Media Outlook 2012-2016. Internet advertising in North America is projected to grow at a 16% compound annual rate to $72.6 billion in 2016 from $34.5 billion in 2011. The company expects Canada’s market to grow by double-digit gains of 20% compounded annually with spending to reach $5.8 billion in 2016 from $2.8 billion in 2011 – surpassing TV advertising by 2014.
Video is the reason behind the growth, added Paterson. Video advertising is expected to increase by 33% in Canada. This means “video will be a $300 million business”. The drivers? The report credits “faster broadband speeds and increased TV streaming from broadcasters and over- the-top providers with driving online video advertising,” he said.
The report also credits increases in the number of broadband households; paid searches; traffic on social networking sites. The increased amount of time spent online is also “attracting advertising and fueling growth in banner/display advertising.” Other factors: “Growing tablet and smartphone penetration and growth in the mobile Internet access subscriber base will boost mobile advertising.”
“Keep in perspective that search, banner and display ads are each $2 billion in each of those segments. There is still a lot of dollars in those segments,” says Paterson. “But we do see some challenges around fragmentation, CPM’s dropping, ad exchanges. They are not going to grow as much as video and that’s where the opportunities are.”
Don’t count TV advertising out. “Growth in Canada will average 5.4 % compounded annually to $4.7 billion in 2016 from $3.6 billion in 2011. “Drivers include live sports, social media. There is still opportunity there,” says Paterson.
Newspapers still play a role, too, despite the doom and gloom. Referencing the Wall Street Journal’s success, Paterson noted many newspapers are experimenting or will experiment with pay walls this fall (including The Globe and Mail). “Our belief is that despite people being asked to pay for access, the advertising will still grow on these websites. Pay wall isn’t a wall – it still allows you to get in.,” says Paterson. “The WSJ put up a pay wall and added 500,000 paid subscribers.”
Within the report, advertising spending is divided into five segments: Internet (15.7%), TV (5.4%), Out of Home (6.0%), Radio (4.3%) and Newspaper (11.1 %). The Internet advertising segment includes spending on wired and mobile (paid search, banner/display, classified, video and other online formats such as email and sponsorships); and advertising delivered to mobile devices such as smartphones and tablets via formats designed for these devices (online and mobile television, newspaper, consumer magazine, trade magazine, directory advertising and radio).
