At $1bn, India to be 3rd biggest contributor to global ad spend growth: Zenith
As per Zenith’s Advertising Expenditure Forecasts, Internet advertising will account for 52 per cent of global advertising expenditure in 2021, exceeding the 50 per cent mark for the first time. However, even as the Internet ad market matures, growth is projected to slow down from 17 per cent in 2018 to 9 per cent a year.
Internet advertising is predicted to account for 47 per cent of global ad spends in 2019, while for 2018 the figure was 44 per cent.
The report further stated that activity in the first half of 2019 leads us to expect only 12 per cent growth for the year as a whole. By 2021, Internet ad spend growth is predicted to have fallen to 9 per cent year on year. The growth rate of the internet ad market is starting to converge with the growth rate of the market as a whole.
Internet ad spend growth is led by the overlapping channels of online video and social media, which are expected to grow at average rates of 18 per cent and 17 per cent a year, respectively, to 2021. These channels are benefitting from continued technological improvements to smartphone technology, connection speeds, and advertising targeting and delivery, combined with strong growth in investment in content. 5G technology, which launched in South Korea and the US in April and is starting to roll out elsewhere, will further improve brand experiences on these channels by making mobile connections much faster and more responsive.
Other channels are growing much less rapidly. Paid search, which accounted for 37 per cent of internet ad spends in 2018, grew by 11 per cent that year, and Zenith forecasts its growth rate to fall to 7 per cent in 2021. A lot of innovation in search is taking place in voice, which is currently not monetised. Online classified advertising (ads sitting alongside other ads rather than content, such as jobs, property and second-hand vehicle listings) is starting to lose out to other digital channels, or free alternatives. Online classified advertising grew 9 per cent globally in 2018, but is already starting to shrink in some markets, and in 2021 we expect spending to decline by 1.6 per cent globally.
Traditional media remains the priority for most big brands
Much of the growth in Internet ad spends is coming from small, local businesses that spend all their budgets on platforms like Google and Facebook, which offer simple, self-serve tools to manage campaigns, and highly targeted audiences. The fact that large numbers of small advertisers are spending all their budgets online means they are skewing the overall picture. The global average is made up of very many small advertisers that spend all their budgets online, and large advertisers that – on average – devote considerably less than half their budgets to it. Big brands are investing large sums in internet advertising, but the majority are still spending most of their budget in traditional media.
“The categories that have advanced the furthest in using modern digital channels are technology, media, finance and professional services,” said Matt James, Zenith’s Global Brand President. “And even within these, brands still rely on traditional media to create broad mass awareness and reinforce brand values.”
Some traditional media face tough competition
Within the traditional media, print has long been in decline as online alternatives have taken their readers and advertisers. The ad revenues of printed newspapers and magazines peaked at US$164 billion in 2007 and will total just US$70 billion this year. Broadcast television is now beginning to shrink, though not nearly on the same scale: Zenith forecasts traditional television ad revenues to shrink every year from now to 2021, falling from US$184 billion in 2018 to US$180 billion in 2021.
Other traditional media are more healthy. Radio is increasing its ad revenues by 1 per cent annually. Out-of-home contractors continue to expand their digital display networks, contributing to 4 per cent annual growth in their revenues. Cinema, though accounting for a tiny 0.8 per cent of the total ad spends, is growing at 12 per cent a year, thanks mainly to a boom in the popularity of cinema in China.
Global adspend to grow 4.6% in 2019, led by the US
Zenith forecasts global ad spend to grow by 4.6 per cent this year, to reach US$639 billion. That’s marginally down from the 4.7 per cent growth forecast in March, but is a strong result given the increased estimates of how much was spent in 2018. Zenith now estimates growth in 2018 at 6.4 per cent, up from its previous estimate of 5.9 per cent, creating a tougher comparative for 2019.
Global ad spend is now forecast to increase by US$28 billion this year. Almost half this growth (US$13 billion) will come from the US, which is benefiting from very rapid growth in Internet advertising – at 15.4 per cent, ahead of the global average of 11.7 per cent. China will be the next biggest contributor to growth, adding US$4 billion in extra ad spend, followed by the UK and India at US$1 billion each.
“The point at which Internet advertising exceeds 50 per cent of global ad spend has been approaching for some time, but this is the first time it has appeared in our forecasts,” said Jonathan Barnard, Head of Forecasting at Zenith. “However, 2021 will be the first year of single-digit internet ad spend growth since 2001, the year the dotcom bubble burst.”