Mobile advertising will account for 30.5 per cent of global advertising expenditure in 2020, up from 19.2 per cent in 2017, according to Zenith’s Advertising Expenditure Forecasts, published today. Expenditure on mobile advertising will total $187bn (£141bn) in 2020, more than twice the $88bn spent on desktop advertising, and just $5bn behind the $192bn spent on television advertising. At the current rate of growth, mobile advertising will comfortably overtake television in 2021.
As internet users switch from desktop to mobile devices – and new users go straight to mobile – online advertising is making the same switch. Advertising on mobile devices is rising at a meteoric rate, and is taking market share from all most other media. Mobile ad spend grew 35 per cent in 2017, and Zenith expects it to grow at an average rate of 21 per cent per year to 2020.
However, Zenith cautions that brands that are shifting budgets to mobile may be affecting their ability to win new customers and expand their market share. Zenith’s Touchpoints ROI Tracker research shows that traditional mass media are more effective at driving recall among new or light buyers; therefore, having a strong understanding of acquisition channels and retention channels is key.
According to the Touchpoints ROI Tracker, television ads are most effective at driving recall among potential customers, while mobile ads are least effective. Potential customers are 53 per cent as likely to recall television ads as existing customers, but for mobile ads this falls to 41 per cent.
Targeting mobile ads at existing customers can certainly help brands achieve short-term performance targets, especially because mobile is increasingly tying together the whole consumer journey. However, mobile is currently less effective at creating long-term awareness among potential customers than traditional media, so brands with a heavy mobile presence should consider investing more in traditional mass media to compensate for this.
Most of the traditional media are still growing despite the inexorable rise of mobile advertising, but generally at very low rates. Zenith forecasts TV and radio to grow by 1 per cent per year between 2017 and 2020, while out-of-home advertising grows by 3 per cent per year. Cinema, however, is growing at 16 per cent per year, thanks to investment in new screens, successful movie franchises, and better international marketing. The main driver, though, is surging demand in China, where ticket sales increased 22 per cent in 2017. China overtook the US to become the world’s biggest cinema advertising market in 2017, worth $1.2bn, and by 2020, Zenith expects it to reach $2.8bn.
Print advertising continues to shrink together with circulations: between 2017 and 2020, Zenith forecasts newspaper ad spend to shrink by an average of 5 per cent a year, while magazine ad spend shrinks by 6 per cent. This refers only to advertising within print titles, though – publishers’ online revenues are counted within the desktop and mobile internet totals, so their overall performance is not as bad as the print figures suggest. Research organisations in some markets – such as the Advertising Association/WARC in the UK – provide combined print and digital ad revenue figures for publishers, generally showing that the digital revenues soften but do not reverse the decline in print.
Zenith forecasts global advertising expenditure to grow 4.5 per cent this year. That’s fractionally behind the 4.6 per cent growth it forecast in March, primarily because it has upped its figures for 2017, providing a tougher comparison. Zenith now estimates that global ad spend grew 4.2 per cent in 2017, compared to its previous estimate of 4 per cent. It forecasts 4.2 per cent growth for 2019 and 4.3 per cent growth for 2020, so growth will remain comfortably within the 4 - 5 per cent range it has stayed within since 2011.
Asia Pacific is by far the biggest contributor to global ad spend growth. Between 2017 and 2020 it will contribute 43 per cent of all the new ad dollars added to the market – $32.1bn out of the $75.1bn total. Six of the 10 markets that will contribute the most to global growth are in Asia Pacific: China (which by itself will account for 22 per cent of global growth); India (which will contribute 5 per cent); Indonesia (4 per cent); Japan (3 per cent); the Philippines (3 per cent); and South Korea (2 per cent). Zenith forecasts that Asia Pacific will account for 33.8 per cent of global ad spend in 2020, up from 32.6 per cent in 2017.
N. America, currently the largest advertising region, is falling behind in growth. Zenith expects it to contribute 27 per cent of new ad dollars between 2017 and 2020, while its share of global ad spend slips from 37.1 per cent to 36 per cent.
“Dynamic markets in Asia Pacific are leading the way in global ad spend growth, growing at 5 per cent-6 per cent a year,” said Jonathan Barnard, Zenith’s head of forecasting and director of global intelligence. “By the middle of the next decade it will be the biggest advertising region in the world.”
Vittorio Bonori, Zenith’s global brand president also noted that: “the mobile device in our pockets is becoming the gateway to our media world, but its brand-building capabilities are still in question – simply applying old practices to new technology may not translate to brand growth. Having a clear understanding of how the entire ecosystem of paid, owned and earned media works together to drive return on investment is vital.”
Looking a little closer to the present day, IPG Mediabrands has released its latest MAGNA advertising forecast. These show global ad revenues growing by 6.4 per cent in 2018, to $551bn. This is significantly above MAGNA’s previous forecasts (+5.2 per cent, published December 2017) due to a stronger-than-expected market year-to-date, for digital media sales in particular. The major cyclical events taking place in 2018 (The FIFA World Cup in Russia, Mid-Term elections in the US, and Winter Olympics in South Korea) will contribute one percentage point to global ad growth.
Digital ad sales – including display, video, search, social - will grow by 15 per cent this year, to $250bn, , while offline ad sales – including linear television, print, broadcast radio and out-of-home – will decrease by -0.2 per cent to $300bn. Digital media sales will represent 46 per cent of total ad sales by the end of 2018 and MAGNA anticipates that they will account for 50 per cent of global ad dollars by 2020. They will reach that milestone this year in the US, while the market share of digital media sales is already beyond 60 per cent in markets such as the UK and China.
The majority of digital ad sales (62 per cent) are now generated by impressions and clicks on mobile devices (mostly smartphones). Mobile ad sales will grow by +30 per cent in 2018, while desktop-based ad revenues will shrink by 2 per cent, due to ad blocking and the rapid shift of digital media consumption towards smartphones and away from computers. Social, video and social formats continue to drive digital advertising growth.
Despite the scale reached by digital media spend and controversies that hit some of the media owners in the first half of 2018, ad spend has showed no signs of slow-down yet. The combined advertising revenues of Facebook and Google grew by 31 per cent year-over-year in the first quarter of 2018, even faster than in 2017 (+27 per cent).
MAGNA does anticipate a mild slow-down in the second half of the year as many big consumer brands are slowing down or pausing their long-term budget reallocation from television into digital media, but so far, spending from small, local, direct advertisers, sometimes re-allocated from below-the-line marketing channels such as direct mail and yellow pages, continues to grow quickly, offsetting any slow-down from big brand advertisers.
In the UK, MAGNA predicts growth of 11.5 per cent for digital advertising sales in 2018 to £12bn, representing 63 per cent of total ad sales. The bulk of this growth will come from internet-native, non-editorial digital formats, primarily search and social. Combined ad revenues increased by 20 per cent in 2017 and now represent 67 per cent of digital ad sales, the vast majority of it controlled by Facebook and Google. By contrast, display formats such as banners and video show low single-digit growth, while static banners have been shrinking for several years, due to ad blocking and the rapid transition to an app-centric, mobile-centric web.
Mobile advertising sales are expected to increase by +32 per cent in 2018 to reach £6.4bn, which represents 53 per cent of digital ad sales and 33 per cent of total ad sales. Meanwhile revenues from desktop-based impressions and clicks are expected to shrink by 5 per cent this year.