Internet advertising will account for 52 percent of global advertising expenditure in 2021, exceeding the 50 percent mark for the first time, according to research by Zenith. That’s up from the 47 percent of global ad spend in 2019 and 44 percent in 2018.
However, the growth rate is falling rapidly as the internet ad market matures. Internet ad spend grew 17 percent in 2018, but activity in the first half of 2019 leads the agency to expect only 12 percent growth for the year as a whole.
By 2021, researchers expect internet ad spend growth to fall to 9 percent 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 percent and 17 percent a year, respectively, to 2021.
These channels are benefiting from continued technological improvements to smartphone technology, connection speeds, and advertising targeting and delivery, combined with strong growth in investment in content. 5G technology 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 percent of internet ad spend in 2018, grew by 11 percent that year, and researchers forecast its growth rate to fall to 7 percent 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 percent globally in 2018, but is already starting to shrink in some markets, and in 2021 researchers expect spending to decline by 1.6 percent globally.
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 USD 164 billion in 2007 and will total just USD 70 billion this year. Broadcast television is now beginning to shrink, though not nearly on the same scale: the researchers expect traditional TV ad revenues to shrink every year from now to 2021, falling from USD 184 billion in 2018 to USD 180 billion in 2021.
Other traditional media are more healthy. Radio is increasing its ad revenue by 1 percent annually. Out-of-home contractors continue to expand their digital display networks, contributing to 4 percent annual growth in their revenues. Cinema, though accounting for a tiny 0.8 percent of total adspend, is growing at 12 percent a year, thanks mainly to a boom in the popularity of cinema in China.
Global ad spend to grow 4.6 percent in 2019, led by the US
The researchers forecast global ad spend to grow by 4.6 percent in 2019 to reach USD 639 bln. That’s marginally down from the 4.7 percent 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 percent, up from its previous estimate of 5.9 percent, creating a tougher comparative for 2019.
Global ad spend is forecast to increase by USD 28 billion this year. Almost half this growth (USD 13 billion) will come from the US, which is benefiting from very rapid growth in internet advertising – at 15.4 percent, ahead of the global average of 11.7 percent. China will be the next biggest contributor to growth, adding USD 4 billion in extra ad spend, followed by the UK and India at USD 1 billion each.
