- Strong 6.9 magnitude earthquake hits Tibet near India-China border
- Navy Says Genitalia Air Display 'Absolutely Unacceptable'
- Moody's Withdraws RCom's Corporate Family Rating On 'Default'
- Sushil Kumar strolls to national gold with three walkovers
- Madras High Court confirms two-year jail term of Natarajan in 1994 car import case
Global internet advertising to overtake TV ads for first time
MUMBAI: For the first time, global internet advertising will overtake ad expenditure on traditional television. This historic moment will be in 2017, according to forecast data provided by media agency Zenith.
Another key change is that social media advertising will race past ad expenditure on printed newspapers. This will, however, take place in 2019.
Global internet advertising expenditure will grow by 13% to reach $205 billion in 2017, according to Zenith’s new Advertising Expenditure Forecasts.
Internet advertising will attract 36.9% of all advertising expenditure, up from 34% in 2016. This will be the first year in which more money will be spent on internet advertising than advertising on traditional television which will total $192 billion, Zenith said.
The sheer scale of internet advertising means its growth rate is slowing. Internet adspend grew 17% in 2016, down from 20% in 2015. Zenith expects this growth to further slow down to 13% in 2017, 12% in 2018 and 10% by 2019. It will, however, continue to add $23billion-$24 billion a year.
In this environment it is vital that platforms and publishers address advertisers’ valid concerns about viewability and brand safety to secure sustainable growth. As the market matures, advertisers need to know for certain that their ads are being actively viewed by real people in appropriate environments.
Social media to overtake newspaper advertising in 2019
Zenith forecasts ad expenditure on social media to reach $55 billion in 2019, overtaking advertising expenditure on printed newspapers, which will total $50 billion.
Social media advertising is the fastest-growing component of internet advertising – it grew 51% in 2016, and Zenith forecasts it to grow at an average rate of 20% a year to 2019.
Newspaper advertising, meanwhile, is shrinking by 5% a year as circulations continue to fall. Newspaper adspend has shrunk every year since peaking at $113 billion in 2007, and by 2019 will be back to levels last seen in 1985 – and that’s without adjusting for inflation. Note that these newspaper figures only includes advertising in printed editions – newspapers’ online revenues are included in the internet advertising total.
Long streak of steady global adspend growth
The global ad market has grown at a steady pace of 4-5% a year since the beginning of the decade, and Zenith expects it to continue to do so through to 2019.
Zenith’s forecast for 2017 is for 4.4% growth (unchanged since Zenith last published forecasts in December), down slightly from 4.6% growth in 2016.
Zenith forecasts another 4.4% growth in 2018, followed by 4.2% in 2019. These rates are slightly below the growth rates that the IMF forecasts for nominal GDP.
Advertising growth is concentrated in big cities
In recent years, big cities have been the focus of innovation, migration and trade. Their populations are younger and have higher incomes than populations elsewhere, although they also pay a lot more for their housing. As part of a wider project to identify the value of individual cities to advertisers, Zenith has conducted a study attributing advertising expenditure to individual cities, by estimating the amounts spent targeting the inhabitants of these cities (and their surrounding metropolitan areas) by advertising in local, national and international media.
Zenith estimates that just ten cities will contribute 11% of all the growth in global adspend between 2016 and 2019. In descending order of contribution, this will be New York, London, Los Angeles, Jakarta, Tokyo, Shanghai, Manila, Beijing, Dallas and Houston.
Last year $61 billion was spent targeting the population of these ten cities, and Zenith forecasts this total to rise to $69 billion by 2019.
The top 50 will contribute 27% of total global growth, and the top 250 will contribute 50%. New York is the world’s most important city for advertising, where $15 billion will be spent this year, followed by Tokyo ($13 billion), Los Angeles ($9 billion), London ($8 billion) and Chicago ($6 billion).
“Population numbers, productivity and disposable incomes are rising faster in cities than elsewhere. So city dwellers are becoming more valuable for advertisers seeking growth. Big cities are now driving growth in adspend,” said Zenith head of forecasting Jonathan Barnard.
“Internet advertising has contributed all of the growth in global adspend since the beginning of the decade, and has stimulated much of the innovation we’ve seen in the market. Innovation is proceeding as fast as ever, and we believe that this is what will continue to drive brand growth for advertisers,” said Zenith global brand president Vittorio Bonori.