U.S. Ad Spending Up More Than Expected

The presidential election, Rio Olympics and soaring spend on digital advertisements are helping the U.S. advertising market surpass revenue expectations for 2016, according to a new forecast by Carat, an arm of Dentsu Aegis. The study says that media spend will reach $204.8 billion domestically for 2016. That’s a 5% increase from 2015, and better than the 4.7% gain Carat had previously predicted.

“Growth in the U.S. is fueled by the upcoming U.S. presidential elections, accounting for approximately $7.5 billion of additional spend,” Carat said in its report. Meanwhile, the Rio 2016 Olympics and Paralympics contributed to a strong first half of the year in the market with an incremental $1.3 billion in spending.

While the elections and Olympics only come around every four years, a more sustainable factor is also driving the advertising market’s gain: investment in digital ads, particularly on mobile, video and social media platforms. Indeed, digital is the fastest growing segment of the advertising market; Carat predicts a global gain of 15.6% this year and 13.6% in 2017.

While television still captures the most ad revenue globally, accounting for 40.3% of media spending versus 30.2% for digital, there are already markets in which digital has overtaken the traditional medium. Digital will be the top ad medium by revenue this year in 13 of 59 markets analyzed by Carat. Those include the United Kingdom, Sweden, Denmark, Hungary, France, Hong Kong and Estonia.

In the U.S in 2016, digital ad spend will likely rise to $56.8 billion, representing 27.8% of all advertising spending, Carat says. Next year, digital will account for 30.5% of overall U.S. ad spend.

The promotional product industry generated approximately $22 billion in revenue in 2015, for a growth rate of 3.4% compared to the previous year. Studies by ASI have found that promotional products cost .7 cents per impression, putting them on par with Internet and spot radio ads as the most cost-effective advertising medium.