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Canadian internet ad spending will eclipse TV ad spending by 2016: report

Growth of spending on TV is predicted to climb just 4% annually in the 2012 to 2016 period, according to a Canadian Marketing Association-commissioned study.

A Canadian Marketing Association-commissioned report is predicting advertising spending on TV will grow an average of 3.8% a year between 2012 and 2016, in part due to the ascendance of the internet as a means of entertainment consumption.

By comparison, spending on online advertising will grow an average of 11.7% a year in the period. With the overall ad spend growth over the four years to average 3.8% annually, “as a result, the internet will become the largest destination for ad spending, garnering 26.1%  of the total in 2016 versus 18%  in 2011,” the Conference Board of Canada said in the report released earlier this week.

“By 2016, the internet will overtake television as the single largest destination for ad spending.”

According to a recent report by the Interactive Advertising Bureau of Canada, in 2011 TV advertising spending totaled $3.6 billion and internet advertising spending totaled $2.6 billion.

By media, the board said mobile is predicted to have the most significant annual average growth (27.9%). Despite mobile’s impressive growth rate, the board cautioned that it is starting from a very small base, and so would still only amount to 1.6% of all ad spending in 2016.

“With the effects of the introduction of specialty television having largely run their course and digital television not leading to significant new gains in market share, TV’s share of ad spending has changed little in recent years,” the board explained. “In fact, since 1995, television’s share of advertising revenues has remained near 24%. This trend is expected to continue over the forecast period; television ad revenue growth will average 3.8% between 2012 and 2016, only slightly above the average for all media types.”

Meanwhile, the board also discussed the surge of interest in Netflix. “The rising popularity of Netflix,” it noted, “is also fuelling concerns that Canadian households will eventually opt out of cable TV subscriptions. Within 10 months of becoming available in Canada, Netflix had already reached 1 million members,” it noted, adding that as many as 10% of Canadians were subscribing to the service.

“But Netflix subscribers are not the kind of viewers likely to opt out of their cable or satellite subscription; they are TV lovers. More than 80% of Netflix subscribers also pay for either cable or satellite TV. In addition, Netflix users spend almost one-third more time watching TV (including their time on Netflix) than the average viewer. And more than one-third of Netflix subscribers also pay for a service such as The Movie Network, Movie Central, or Super Écran,” it continued.



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