A new report by Zenith has forecast a slight downgrade in Aussie ad revenue for this year, while innovative digital ad formats will drive global ad growth to 2019.
Between 2016 and 2019, these innovative ad formats (such as social media in-feed ads and online video) will drive 14 per cent annual growth in total display advertising – a category that includes these formats as well as traditional banners – according to Zenith’s new Advertising Expenditure Forecasts report.
Total display expenditure will rise from US$84 billion to US$126 billion over this period, accounting for 64 per cent of all the growth in global ad expenditure. By 2019, total display will account for 50.4 per cent of internet advertising expenditure, exceeding 50 per cent for the first time.
Most of this growth is coming from social media (which will grow at 20 per cent per year) and online video (which will grow at 21 per cent per year).
In Australia, Zenith forecasts a slight downgrade, with ad revenue for 2017 now estimated to grow by 2.9 per cent (versus 3.4 per cent in the prior forecast). While the revenue forecast is behind 2016’s growth, it is still above the overall economic growth forecast for Australia in 2017.
Digital will continue to be the key growth driver in Australia, with an estimated revenue increase of 10.4 per cent. It is anticipated that digital revenue will account for over half of all billings in 2017 (52 per cent share of spend versus 48 per cent in 2016).
Out-of-home continues to perform well off the back of increased inventory, digitisation and tech development, according to the report. Radio and cinema is stable, while the print format continues to be impacted by the shift to digital.
The report noted that TV is sorely missing the federal government election spending last year, but is also under pressure from falling audiences as more revenue shifts to video in line with changes in consumption.
Overall, sectors contributing the most volume in terms of ad spend growth include automotive, retail, alcoholic beverages and technology, while government, media, real estate, travel and food have declined.
Paid search and classified are still growing, but are lagging behind
Expenditure on paid search totalled US$78 billion in 2016, and the report forecasts 10 per cent annual growth to 2019, when it will reach US$103 billion. Growth in paid search will therefore lag behind growth in total internet advertising, which will grow at 12 per cent a year.
In 2016, advertisers spent US$17 billion on internet classifieds, and Zenith expects this total to rise by just 7 per cent per year to US$21 billion in 2019.
TV and online video consolidate their lead in brand advertising
Stripping out classified and search – which are essentially direct-response channels – TV and online video accounted for 48.5 per cent of expenditure on brand advertising in 2016, up from 43.7 per cent in 2010, and Zenith forecasts their market share to rise to 49.3 per cent in 2019.
Global ad spend to grow 4 per cent in 2017
Zenith forecasts global advertising expenditure will grow 4 per cent to US$558 billion by the end of 2017. This is down fractionally from the forecast of 4.2 per cent that Zenith made in June.
The report forecast 4.2 per cent growth in global ad spend for 2018, boosted by the Winter Olympics in Korea, the football World Cup in Russia, and the mid-term elections in the US.