Global expenditure on internet advertising is expected to surpass that of traditional television for the first time this year with an estimated market share of 36.9 percent, up from 34 percent in 2016.
However, the Advertising Expenditure Forecast released by Zenith predicts that the global internet ad spend will grow at a slower rate this year—13 percent to reach US$205 billion, compared to 17 percent in 2016 due to the sheer scale of this sector. The slowing growth pattern is expected to continue through 2019, with an estimated growth of 12 percent and 10 percent in the following years respectively.
“Internet advertising has contributed all of the growth in global ad spend since the beginning of the decade, and has stimulated much of the innovation we’ve seen in the market,” said Vittorio Bonori, Zenith’s global brand president, in a statement. “Innovation is proceeding as fast as ever, and we believe that this is what will continue to drive brand growth for advertisers.”
Meanwhile, social media spend is only expected to overtake newspaper advertising in 2019 to reach US$55 billion. The report mentions that social media is the fastest growing component of internet advertising with 51 percent growth recorded last year. It is expected to grow at a steady rate of 20 percent a year to 2019. Newspaper advertising is shrinking by 5 percent a year with dwindling circulation. By 2019 advertisers will spend the same amount in newspapers as they did in 1985, without adjusting for inflation.
Overall, the global ad market is expected to continue its steady growth rate of 4 to 5 percent seen since the beginning of the decade through to 2019. With 4.6 percent growth recorded in 2016, Zenith forecasts 4.4 percent growth for 2017 and 2018, followed by 4.2 percent growth in 2019. Advertising growth is concentrated in big cities, with five Asian cities among the ten cities identified to contribute 11 percent of growth in all global ad spend between 2016 and 2019.
The top ten cities, in descending order of contribution: New York, London, Los Angeles, Jakarta, Tokyo, Shanghai, Manila, Beijing, Dallas and Houston. A total of US$61 bilion was spent on targeting the population of these ten cities last year. US$13 billion is forecasted to be spent in Asia's top advertising city of Tokyo this year.
Jonathan Barnard, Head of Forecasting at Zenith, said in a release: "Population numbers, productivity and disposable incomes are rising faster in cities than elsewhere. So city dwellers are becoming more valuable for advertisers seeking growth. Big cities are now driving growth in ad spend."