Social media in-feed ads, online video and other digital formats, such as paid content and native advertising, are leading a global growth in advertising.
Between 2016 and 2019, these factors will drive 14 per cent annual growth in total display advertising – a category that includes these formats as well as traditional banners – according to Zenith’s new report, Advertising Expenditure Forecasts, published today.
Total display expenditure will rise from $84 billion to $126bn over this period, accounting for 64 per cent of the total 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, noted the report.
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). 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.
Moreover, 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 and classified growing but lagging behind
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, the report added.
Expenditure on paid search totalled $78bn in 2016, says the report, which also forecasts ten per cent annual growth by 2019, when it will reach $103bn. Growth in paid search will therefore lag behind growth in total internet advertising, which will grow at 12 per cent a year.
TV and online video consolidate their lead in brand advertising
“We distinguish 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,” said the report.
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, the report explains. 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 we forecast their market share to rise to 49.3 per cent in 2019, the report noted.