If there is a crisis of confidence in online advertising, it certainly has not registered yet; according to the latest forecasts, global Internet ad expenditure will grow 13% to reach £163bn ($205bn) in 2017.
Whether this will be affected by the current crisis at Google remains to be seen, with more brand owners and advertising groups than you can shake a stick at demanding action against their ads being placed next to extremist content.
And, if The Sunday Times is to be believed, they will not return unless they get discounts, either.
Even so, according to Zenith’s new Advertising Expenditure Forecasts, online will overtake TV as the biggest sector this year, attracting 36.9% of all spend, up from 34% in 2016.
However, the sheer scale of online advertising means its growth rate is actually slowing. Internet adspend grew 17% in 2016, down from 20% in 2015, and Zenith expects growth to slow to 13% in 2017, 12% in 2018 and 10% by 2019.
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, Zenith reckons.
Advertising expenditure on social media is predicted to grow at an average rate of 20% a year to 2019 when it will hit £43.8bn ($55bn). Newspaper advertising, meanwhile, is shrinking by 5% a year as circulations continue to fall.
Anyone looking for pointers about direct mail spend, however, could be in for some disappoinment. The medium, which is still the third largest by spend, is totally absent from the report.
When it comes to where the money is being spent, 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, New York, London, Los Angeles, Jakarta, Tokyo, Shanghai, Manila, Beijing, Dallas and Houston.
“Population numbers, productivity and disposable incomes are rising faster in cities than elsewhere,” said Jonathan Barnard, head of forecasting at Zenith. “So city dwellers are becoming more valuable for advertisers seeking growth. Big cities are now driving growth in adspend.”
“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,” said Vittorio Bonori, Zenith’s global brand president. “Innovation is proceeding as fast as ever, and we believe that this is what will continue to drive brand growth for advertisers.”
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