We are more than halfway through 2019 and it’s time to check on the status of one of the year’s biggest predictions.
In February, eMarketer released a report declaring that digital advertising would surpass traditional for the first time, capturing more than half of all dollars spent by advertisers. Digital ad spending in the US was projected to be about $130 billion or about 54% of total advertising dollars. Traditional advertising, including TV, magazines and newspapers, was estimated to total about $109 billion.
In addition, worldwide digital ad spending was estimated to rise by 17.6% to $333.25 billion, meaning that digital would account for half of the global ad market as well. Many countries, however, have already reached digital dominance. China, UK, Norway, Ireland, Denmark, Australia, New Zealand and Canada hit 50% or more digital ad spending in 2018.
It should come as a shock to no one that this would eventually happen. For years, the industry has been moving closer and closer to this mark. In fact, the Interactive Advertising Bureau called 2018 a “landmark year” for digital advertising. The average person spends about 4 hours per day on their smart phone and that doesn’t include desktop, tablet or other smart device web usage, which also fall under the digital umbrella. Naturally, targeting consumers via digital has become the primary focus for most advertisers since we invest so much time in these mediums. And we are willing to play along too; 78% of digital video viewers are willing to watch advertising in exchange for free content.
Of course, Google and Facebook hold the No. 1 and No. 2 spots globally, with $103.73 billion and $67.37 billion, respectively, in net ad revenues. China based Alibaba comes in third, at $29.20 billion. Amazon, though growing steadily, lags behind in fourth place, with $14.03 billion in net ad revenues. However, in the US, Amazon comes in third place and is expected to grow by 50% this year. It’s quickly closing the gap with the No. 2 Facebook. Much of the growth on these platforms is fueled by small businesses due to the massive reach and simple service tools. A report by Zenith found that small businesses spend nearly all of their ad budgets online.
However, the same report from Zenith claims the growth rate is actually falling. Internet ad spend grew 17% in 2018, but based on activity in the first half of 2019, growth for 2019 as a whole should only be 12%. By 2021, internet ad spend growth is projected to have fallen to 9% year on year. Reasons for this include the growing popularity of voice search, which is not yet fully monetized, and the drop in paid online classified ads, compared to free alternatives.
Most experts agree that it is still best to utilize an omnichannel strategy for the most effective ad spending. Advertising in traditional mediums is on the decline, but it can pack an effective punch, nonetheless. Larger businesses are indeed still devoting parts of their budget to traditional, but there are certain mediums that are being favored more than others.
Out-of-home advertising, which includes billboards and transit ads and is largely becoming digital itself, is expected to increase by 1% in the US and 4% worldwide. In addition globally, radio is increasing its ad revenue by 1% each year, and ads in movies is growing by 12% a year, largely because of the popularity of movies in China. Print advertising, on the other hand, has been suffering for years and will continue to do so. eMarketer predicts a whopping 17.8% decline in the US. And television, which had long been the No. 1 medium, is projected to go down as well, by 2.2% in the US. Although, being a non-Olympics and non-election year may be hurting those numbers more than usual.
No matter how other areas perform, it’s safe to assume that digital will continue to be the dominant form of advertising moving into the future. It is simply the way the world works these days and the technology and speed of our devices will only continue to improve. The bottom line for advertisers is that they need to put their money in places where consumers are the most receptive and most likely to interact. The answer is digital.