There’s no more US presidential election or splashy Summer Olympics to prop up ad spend, but there is still growth to be found – especially on the mobile front.
Although the growth rate in total ad spend has slowed, global mobile advertising is on pace to reach $110 billion this year, surpassing the $100 billion mark for the first time, according to Magna’s global ad spend forecast, released late last week.
Zenith is predicting even more explosive growth.
In its global ad expenditure forecast released Monday, Zenith anticipates mobile advertising to reach $155 billion in ad spend by 2019, well ahead of its forecast for desktop’s total of $92 billion.
But in terms of total global ad expenditures, Zenith is now projecting 4.2% growth for 2017, down from 4.8%, to $559 billion.
By 2019, Zenith predicts mobile will account for 62.9% of all internet ad spend – mostly stemming from social and other in-app formats like video and native.
“We’re seeing enormous growth in online and mobile video and social media advertising, which is part of the reason why banner advertising is stagnant,” said Jonathan Barnard, head of forecasting for Zenith. “In social, ads are part of the news feed, it’s very native and consumers are much more engaged than with banners.”
Despite social and mobile video growing like weeds, search, which historically commanded a majority of digital ad budgets, is emerging as a bit of a wild card.
Magna predicts that search advertising will grow by around 10% annually to reach $140 billion by 2021. At that point, it will account for more spend than print, radio and out of home combined.
Search is also garnering more interest from advertisers, according to Magna, because of product enhancements at the platform level, search remarketing, the growth of noncore search products such as Alibaba’s product listings and the availability of customer list matching, like Microsoft Bing’s Custom Audiences.
Yet Zenith points out that paid search and classifieds both lag “substantially” behind digital display, with paid search growing at a rate of 9% per year, compared to display’s 14% annual growth forecast through 2019.
But while search is still a powerful part of an advertiser’s repertoire that has the potential to unlock “large amounts of value,” in Barnard’s view, it hasn’t “benefited in the same way as [social or video] with the mobile revolution.”
Consumer behavior is partly to blame for that discrepancy. As consumers spend more and more time in apps than in standard web browsers, search patterns – and the way they’re calculated – are naturally starting to change.
For example, although many consumers still use generic search on desktop, on mobile, they’re more likely to turn to dedicated apps, like Amazon, and those results wouldn’t count as search as such.
“It would result as a query within an app,” Barnard said. “Search engines like Google face quite a challenge to maintain their position with the rapid pace of growth in mobile.”
Search also is emerging as a stronger complement to TV. Historically, TV was more of an awareness-driving medium, while search played to direct response budgets.
As Search Evolves, TV Investment Shifts
Now, the lines between TV and social are blurring as more advertisers capitalize on paid search to take advantage of the halo effect of TV.
Dentsu Aegis’ global ad spend forecast predicts digital as a whole, including search, will start to overtake traditional TV spend. The report projects that digital will comprise 37.6% of global media spend in 2018 (up from 34.8% this year), versus 35.9% for television (down from 37.1% in 2017), amounting to a total value of $215.8 billion.
But evolution in marketer spend isn’t lost on television suppliers, which are adjusting to consumers’ changing viewership habits by investing more in multichannel content and ad-free subscription models.
Moreover, Zenith notes that an emerging subcategory, which it dubs “audiovisual advertising” – defined as television plus online video – is holding onto the dominant share of display advertising.
As a result, audiovisual advertising accounted for 48.4% of display advertising in 2016, up from 43.7% in 2010, and Zenith estimates the subcategory will retain that same momentum through 2019.
In comparison, Magna predicts that by 2021, digital video advertising will have passed the $50 billion mark globally.
Digital video, which Barnard referred to as “the most important display medium” is complementary to, rather than competitive with, TV.
“TV allows advertisers to get mass reach, whereas online video allows advertisers to target individuals, not just demographics,” Barnard said. “Although much less than digital video, we do see TV as a whole growing globally and [think it] will continue to do so for the foreseeable future.”