Global online advertising revenue grew by 18.6 per cent in Q4 2017, over Q3 and was up 30.9 per cent year-on-year. The figures come from Forrester’s Q4 2017 Digital Marketing Tracker, which analyzes the online advertising revenue generated by 13 key digital media companies.
These are Google, Facebook, Twitter, Snap, Alibaba, Baidu, Tencent, SINA, Sohu, Yahoo Japan, LINE, NAVER, and Yandex. This quarter was the first time in the history of this research that all 13 companies posted positive year-over-year growth.
Facebook and Alibaba accounted for 48 per cent of the year-on-year growth in global advertising revenue, and higher ad prices were a key driver. Specifically, Facebook’s price-per-ad growth accelerated to 43 per cent year-on-year in Q4 2017, up from 35 per cent in Q3 2017, according to the company.
The report says that Facebook’s grip on marketing budgets will be hard to shake. Over the past three years, Facebook has grown its share of global advertising revenue from 10.4 per cent in Q1 2015 to 19.5 per cent in Q4 2017. Only Alibaba comes close, with its share growing from 4.1 per cent to 9.1 per cent over the same period. All other sites showed only modest share gains or share losses.
This shift in budgets is a testament to the value that marketers assign to ads on Facebook, as is the fact that Facebook is able to command ever higher prices for each ad slot, the report notes.
It also concludes that the Cambridge Analytica scandal will not cause advertisers to exit en masse, due to the prominence of Facebook in many marketers’ media budgets, which will help stall any abrupt shift away from the network, giving Facebook some time to repair its damaged reputation.
The report notes also that most Facebook advertisers are smaller businesses. On its Q4 2017 conference call, Facebook said that it has 6m advertisers and 70m businesses on its network globally. According to Forrester, only 69,824 businesses globally employ more than 1,000 people. Thus, the vast majority of the advertisers and businesses on Facebook must be smaller businesses with less than 1,000 employees.
And according to Forrester’s own research, smaller businesses favour marketing on social media. In a recent survey it conducted, 42 per cent of US small business owners said that they promote or advertise their business using posts on social networking sites, which is noticeably higher than all other forms of digital and offline marketing.
When Forrester asked about their use of a variety of social media networks, 58 per cent of US small business owners said they use Facebook to promote their business — twice as many as the next most popular choices, LinkedIn and Twitter. And 32 per cent said they use Facebook for advertising — far ahead of the next most popular choice, Instagram.