- Paid search and classified are still growing, but are lagging behind
- Television and online video consolidate their lead in brand advertising
- Global ad spend to grow 4% this year
- Social & online video drive digital's growth
Social media in-feed ads, online video and other digital formats such as paid content and native advertising are leading the growth in global advertising, according to Zenith’s new Advertising Expenditure Forecasts. Between 2016 and 2019 they will drive 14 per cent annual growth in total display advertising – a category that includes these formats as well as traditional banners.
Zenith forecasts that global advertising expenditure will grow 4.0 per cent to USD 558bn by the end of 2017. This is down fractionally from the June forecast of 4.2 per cent. The extended period of mourning for King Bhumibol Adulyadej has led to a second year of decline for Thailand; and Malaysia’s recovery from the downturn of 2016 has been less rapid than hoped.
Total display expenditure will rise from USD 84bn to USD 126bn over this period, accounting for 64 per cent of all the growth in global ad expenditure. By 2019 total display will account for 50.4 per cent of internet advertising expenditure, exceeding 50 per cent for the first time.
Most of this growth is coming from social media which will grow at 20 per cent a year; and online video which will grow at 21 per cent a year. The report highlighted that social media is central to many of its users’ digital lives – it’s where they plan their social life, read their news and document their activities – and brands can use it to communicate with them very effectively. Online video is much better at conveying brand values than traditional display formats like banners. These are no longer mutually exclusive categories; indeed video advertising is now central to the growth strategies of most social media platforms.
Paid search was the largest internet advertising channel until 2015, when it was overtaken by display. Much of its recent growth has come from innovations in mobile and location-based search, and future growth will come from adapting search ads to voice-activated personal assistants like Siri and Alexa. Expenditure on paid search totalled USD 78bn in 2016, and we forecast 10 per cent annual growth to 2019, when it will reach USD 103bn. Growth in paid search will therefore lag behind growth in total internet advertising, which will grow at 12 per cent a year.
“Internet display is coming into its own as a brand-building media, powered by social media and online video. But the distinctions between online video and traditional television are being eroded, and the two work together much better than they do separately,” said Jonathan Barnard, Head of Forecasting and Director of Global Intelligence at Zenith.
Classified advertising – advertising on dedicated web pages without editorial content, often for cars, house and jobs – was an important part of the early internet, but its share of total internet expenditure has been shrinking for many years as users have turned to free listings, auction sites and other substitutes. In 2016, advertisers spent US$17bn on internet classifieds, and we expect this total to rise by just seven per cent a year to USD 21bn in 2019.
Zenith distinguishes between television and online video advertising because they are distributed differently, generally sold differently and categorised differently by third-party agencies that monitor advertising expenditure. But for many consumers they are beginning to blur together as smart TVs and other devices deliver internet content to households’ main TV sets. Advertisers are also finding that it makes less and less sense to plan television and online video separately: they work best as complements rather than substitutes. Television supplies reach, while online video offers targeting and personalisation. Together they are becoming more important than ever to advertisers seeking to build brands. Stripping out classified and search – which are essentially direct-response channels – television and online video accounted for 48.5 per cent of expenditure on brand advertising in 2016, up from 43.7 per cent in 2010, and Zenith forecasts their market share to rise to 49.3 per cent in 2019.
For 2018, Zenith forecasts 4.2 per cent growth in global ad spend, boosted by the Winter Olympics in Korea, the football World Cup in Russia, and the mid-term elections in the US.
“Internet platforms are continually innovating to provide advertisers with new ways of communicating with consumers. But newer doesn’t always mean better, and agencies must use all the data and technology available to them to determine how to combine new and old media to tell brand stories most effectively,” said Vittorio Bonori, Zenith’s Global Brand President.