1. Mobile advertising will lead growth in ad spending

Worldwide advertising on mobile devices, including cellphones and tablet computers, will expand at a rate of 50% a year from now until 2016, according to a report by the multinational media company Zenith Optimedia. Advertising around the world on mobile media currently represents 13.1% of digital advertising and just 2.7% of total advertising spending of all kinds, the company says. But by 2016, it projects that mobile ad spending will jump to 7.7% of the total, making it the fourth largest advertising medium.

Israel is lagging behind the global trend in this regard. Last year, mobile advertising spending was 50 million shekels ($14.4 million), just 5.7% of digital ad spending, Zenith Optimedia’s local office reports. The agency attributes growth in the medium last year to last January’s Knesset election in which mobile advertising came to the fore, spurring future growth in the sector over the course of the year.

This segment of the ad industry will be the most influential factor on the global advertising scene, Zenith Optimedia says, contributing 36% of advertising growth of all kinds between now and 2016. In fact, global mobile advertising spending is expected to expand to $46 billion by then.

2. Video ads will boost Internet revenues

Digital advertising of all kinds, including mobile ads, represented 20.6% of the world’s advertising spending last year, Zenith says. The company expects Internet advertising to grow at a 16% clip over the next several years. By 2016, as a result, Internet ad spending should be 27% of all advertising outlays.

The growth will be led by spending on display ads, including video display advertising, which is projected to grow by 19%, in large measure due to advertising on social media such as Facebook. This growth can also be attributed in part to the fact that there has been an improvement in methods to measure audience exposure to such ads. Revenue growth from paid search engine ads is expected to rise by 14%.

In Israel, Internet advertising’s share of the total advertising pie is actually higher than the international average, at 24%. Some markets abroad, however, have already seen comparable figures exceeding 30%: 41% in Britain, 39% in Denmark, 35% in the Swedish market, 34% in Norway, 32% in Australia and 30% in South Korea.

Zenith’s local office took note of developments here over the past year when it comes to measuring audience exposure to Internet ads and the fact that a local committee that produced ongoing data on Internet use has ceased to function amid disputes among major websites. As a result, there is currently no entity providing comparative data on the local scene.

“It’s amazing to see that the most measurable medium is actually the one for which [audience ratings] are not being monitored at all in Israel,” said Yoav Tzuker, who heads Zenith’s digital operations here.

At Zenith the feeling is that ultimately advertisers and websites will have to revert to an audience measurement system of some kind. Zenith says display ads are still the leading form of digital advertising here, with 48% of the market, but the growth in this advertising category could sputter, mainly due to the constant decline in Israel and abroad of the rate at which Internet users click on banner ads.

3. The Israeli ad market has been at a virtual standstill

Despite the sense that the advertising market here recovered last year, Zenith’s data may deflate some of that enthusiasm. While the global advertising market grew by 3.6% in 2013, Israeli firms boosted their advertising spending by just 0.9%. And that followed an actual decline in spending here of nearly 15% between 2011 and 2012. Zenith’s figures are less rosy than those from another market research firm, Ifat Media Information, which reported that ad spending here grew by 4% last year and not 3.6%. By comparison, in North America last year ad spending reportedly grew by 3.3%, while in Latin America it jumped by 8.1%.

“Even if the change in Israel is minor at this stage, in any event it indicates a change in direction and we therefore expect that 2014 will be even better,” Zenith Optimedia Israel CEO Gabi Attal said.

But a look back over the past decade might just dash any positive feelings about the advertising scene here. According to Zenith, even though the markets in the developed world − especially in the United States and Western Europe − sustained major blows in 2008 and 2010 as a result of the global economic crisis, over the past decade there has still been major growth in ad spending. In Israel the advertising market grew in nominal terms by just 2% between 2001 and 2013, while the comparable global figure was 38%.

In a comparison of advertising spending in relation to a country’s gross domestic product, Israel is ranked 55th among the 78 countries in Zenith’s international network. Ad spending here in relation to Israel’s GDP has declined tremendously over the past decade: It’s now just 0.36% compared to 0.60% a decade ago. At the top of the pack are Croatia at 3.05% and Bosnia at 3.04%. The ratio of ad spending to GDP in Panama is 1.7%, and in the United States 1.07%, putting it in 11th place. Britain is 19th at 0.79%.

4. Television’s expanding Israeli audience

The power of commercial television in Israel, with its plethora of reality shows, has also strengthened over the years. Zenith reports that the audience share of the country’s two main commercial stations, Channels 2 and 10, as a proportion of the entire television audience here has grown substantially over the past decade. While in 2002 the two stations’ combined daily viewership share was 21%, in 2013, it was 31%, and in prime time it was close to 50% in 2013 compared to 30% a decade ago. And people are spending more time watching the two main commercial stations. While the overall number of hours of television that the average Israeli watched grew by 31% between 2002 and 2013, Channels 2 and 10 combined saw a growth of 86%.

Last year, advertising revenues for the franchisees who broadcast on the two stations also grew, by 8% to 1.43 billion shekels. But television’s share of the advertising pie here − 39.1% − is still slightly below the global average of 40.2%. Among the wealthier countries, the share tends to be lower: In North America it’s 38%, and in Western Europe, 30%. By contrast, in Central and Eastern Europe television draws 55% of the market, and in Latin America television’s share is 61%.

5. Declining demand for print ads

The media sector that is most threatened by the technological shifts of recent years is the printed press. Zenith reports that total print advertising outlays plummeted by 24% over the past decade, and the company projects a further 4.2% contraction by 2016. Newspaper publishers around the world are attempting to boost their digital advertising revenues, but the digital income is not generally large enough to offset the losses on the print newspaper side.

One message that Zenith is conveying, however, which should be music to the ears of print publishers, is that people are increasingly prepared to pay for digital content. “The increased rate of ownership of smartphones and tablets is contributing to a change in the approach of readers,” according to Zenith Media’s Ken Granot. “The digital platform also helps publishers reach younger audiences, who traditionally read fewer print newspapers.”

In Israel, the ad share of the printed press declined by 11.4%, with collective ad revenue last year of 980 million shekels, according to Zenith. The print advertising share here is still somewhat higher than the world average, at 26.7%, compared to the global figure of 24.9%. The decline in newspaper advertising revenues can also be attributed in part to declining prices for newspaper ads, which can to some extent be blamed on the appearance of new newspapers. But it is also due to fewer ads being placed in print newspapers. As measured by total column inches of ad space, last year print newspapers here saw a decline of 2% to 3% in advertising while magazines suffered a 10% decline.

Open gallery view A sign advertising diamond jewelry stands on display near the Israel Diamond Exchange in Ramat Gan, Israel, June 12, 2012. Credit: Bloomberg

Open gallery view As newsprint sinks into oblivion, advertizing is increasingly aimed at digital media, such as the ubiquitous smartphone. Credit: Bloomberg