Internet advertising will be more than 50% of global ad spend in 2021, predicts Zenith

According to Zenith’s advertising expenditure forecast internet advertising will make up 52% of global ad spend in 2021.

That figure would see internet ad spend pushed over the 50% mark for the first time, up from 47% this year and 44% in 2018. However, as the internet ad market matures, growth will slow. 2018 saw 17% growth, yet activity in the first half of this year suggests only 12% growth for 2019. In 2021, growth is expected to have fallen to 9%.

Australian trends

In Australia, that growth should slow to 3% (down from 12% in 2018) in 2021. Zenith predicts that, “against a turbulent economic backdrop”, local growth will sit at around 7% this year, meaning internet ad spend growth should fall to an average of 5% year-on-year for the next three years.

Total ad spend in Australia should grow 3% this year to total $17.192bn, reflecting greater internet ad spend and declining TV bookings. Zenith noted that 2018 was up 6%, exceeding its estimate of 3.2%, which creates a tougher comparative for 2019.

“Australia is ahead of curve in relation to digital share of ad spend, achieving the 50% level back in 2017, and will edge closer to the 60% share level over the next few years,” said Elizabeth Baker, Zenith’s head of investment, Sydney.

“The original catalyst for digital spend growth was the transition of print classifieds into online. Today, the fastest growing channel is video which now represents 8% of the total ad market. The mobile platform is also a growing category and now accounts for a quarter of all advertising spend. We anticipate that this will only increase with the launch of 5G in Australia sometime later this year.”

Zenith’s Elizabeth Baker

Global internet ad spend forecast

5G, which launched in South Korea and the US in April, will improve internet brand experiences by making mobile connections faster and more responsive, the forecast said. Zenith said this will help push forward growth of online video and social media, which are set to grow an average of 18% and 17% each year respectively, until 2021.

Other channels will see growth at a far less rapid rate. Paid search, which made up 37% of internet ad spend in 2018, grew by 11% that year. That growth rate is predicted to drop to 7% in 2021, due to voice search innovations that aren’t currently monetised.

Online classified ads are losing out to other digital, or free, channels, growing 8% in 2018 but set to decline by 1.6% in 2021.

Global ad spend to grow 4.6% in 2019

Zenith predicts worldwide growth of 4.6% this year, led by the US, to total US$639bn. This prediction is slightly down from its 4.7% March forecast, but says that since 2018 growth now sits at an estimated 6.4%, against a 5.9% initial estimate, the comparative is harsher.

Almost half of this growth will come from the US (US$13bn of US$28bn). China is next in line with US$4bn spend, followed by the UK and India at US$1bn each.

Group M predicted 3.4% growth in 2019, or 4.6% on an underlying basis, in its recent forecast, released last month.

Traditional media still a priority, but faces competition

Internet ad spend growth is driven by small, local businesses whose marketing budget is funnelled directly into platforms like Google and Facebook. This is skewing the overall picture, according to Zenith. Large advertisers, on average, spend significantly less than half of their total ad budget on internet ads, preferring to mostly stick to traditional media.

Traditional TV ad revenue will shrink every year to 2021, from US$184bn in 2018 to US$180bn in 2021, according to the forecast.

Radio is growing 1% each year, out of home up by 4% annually, and cinema (while just 0.8% of total ad spend) is climbing 12% a year, largely thanks to a cinema boom in China.


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