Online ad growth seen slowing in 2021

Joanna Estrada
July 11, 2019

Although the internet ad market is slowing down worldwide as it matures, this category will account for 52% of global advertising expenditure in 2021, exceeding the 50% mark for the first time.

Much of the growth in internet ad spend comes from small, local businesses that focus on platforms like Google and Facebook. By 2021 Zenith expects internet adspend growth to have fallen to 9% year on year.

Growth in global internet ad spend is being driven by online video and social media, which are expected to grow at average rates of 18 per cent and 17 per cent a year, respectively.

At this point the online advertising sector is expected to slow down to as much as nine per cent as the market becomes more mature and saturated, showing a significant frop from the 17 per cent rate recorded a year ago.

Zenith reports have also suggested that mobile internet usage has also sky-rocketed, hitting 800 hours per year, the equivalent of 33 days continuous consumption. That's down a bit from the 4.7% growth the Publicis Groupe media agency had forecast in March.

Zenith, citing a softening of the market against a turbulent economic backdrop, expects around 7% for 2019.

Zenith forecasts global ad spend to grow by 4.6%, or $28 billion, this year to reach $639 billion. Large advertisers, on average, spend significantly less than half of their total ad budget on internet ads, preferring to mostly stick to traditional media.

At the other end of the scale paid search and classifieds are expected to face a far tougher market with the former managing growth of just 7% in 2021 while the latter is actually expected to contract by 1.6%.

Other traditional media are more healthy.

"The categories that have advanced the furthest in using modern digital channels are technology, media, finance and professional services", said Matt James, Zenith's Global Brand President. "Even within these, brands still rely on traditional media to create broad mass awareness and reinforce brand values".

The advertising revenues for printed newspapers and magazines peaked at $US164 billion in 2007 and will total just $US70 billion this year.

Meanwhile TV ad revenues are expected to fall every year between now and 2021 - although the drop will be less dramatic, with the global figure expected to fall to $180 billion in 2021 from $184 billion in 2018.

The bright sparks in the traditional mix are radio, which is seeing ad revenue increase by 1 per cent annual, plus out-of-home, which is utilising digital display capabilities to lift annual growth by 4 per cent.

5G technology, which launched in South Korea and the U.S. in April and is starting to roll out elsewhere, will further improve brand experiences on these channels by making mobile connections much faster and more responsive.

Group M predicted 3.4% growth in 2019, or 4.6% on an underlying basis, in its recent forecast, released last month. Cinema, though accounting for a tiny 0.8 per cent of total ad spend, is growing at 12 per cent a year, thanks mainly to a boom in the popularity of cinema in China.

5G, which launched in South Korea and the United States in April, will improve internet brand experiences by making mobile connections faster and more responsive, the forecast said.

Zenith previously upgraded its estimate of growth for 2018 from 5.9% to 6.4%.

Global overall advertising spending is expected to rise by Dollars 28 billion in 2019, Zenith said, adding that about half the growth would be from the United States, helped by rapid growth in internet advertising. China will be the next biggest contributor to growth, adding $4 billion in extra adspend, followed by the United Kingdom and India at $1 billion each.

Other reports by Click Lancashire

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