Internet advertising to account for over 50% of global adspend by 2021

By Godwin Anyebe

Internet advertising is set to exceed half of global adspend by 2021, although as the internet ad market matures, growth is projected to slow from 17 per cent to 9 per cent a year. This is according to the Zenith’s Advertising Expenditure Forecasts a report published recently.

The figure is up from 47 per cent that internet advertising will account for this year, and 44 per cent in 2018.

However, the growth rate is falling rapidly as the internet ad market matures. Internet ad spend grew 17 per cent in 2018, but activity in the first half of 2019 leads us to expect only 12 per cent growth for the year as a whole. By 2021 we expect internet ad spend growth to have fallen to 9 per cent year on year. The growth rate of the internet ad market is starting to converge with the growth rate of the market as a whole.

The report disclosed that, internet ad spend growth is led by the overlapping channels of online video and social media, which are expected to grow at average rates of 18 per cent and 17 per cent a year, respectively, to 2021. These channels are benefitting from continued technological improvements to Smartphone technology, connection speeds, and advertising targeting and delivery, combined with strong growth in investment in content.

5G technology, which launched in South Korea and the US in April and is starting to roll out elsewhere, will further improve brand experiences on these channels by making mobile connections much faster and more responsive.

Other channels are growing much less rapidly. Paid search, which accounted for 37 per cent of internet ad spend in 2018, grew by 11 per cent that year, and we forecast its growth rate to fall to 7 per cent in 2021. A lot of innovation in search is taking place in voice, which is currently not monetised.

Online classified advertising (ads sitting alongside other ads rather than content, such as jobs, property and second-hand vehicle listings) is starting to lose out to other digital channels, or free alternatives. Online classified advertising grew 9 per cent globally in 2018 but is already starting to shrink in some markets, and in 2021 we expect spending to decline by 1.6 per cent globally.

Much of the growth in internet ad spend is coming from small, local businesses that spend all their budgets on platforms like Google and Facebook, which offer simple, self-serve tools to manage campaigns, and highly targeted audiences.

The fact that large numbers of small advertisers are spending all their budgets online means they are skewing the overall picture. The global average is made up of very many small advertisers that spend all their budgets online, and large advertisers that – on average – devote considerably less than half their budgets to it. Big brands are investing large sums in internet advertising, but the majority is still spending most of their budget on traditional media.

“The categories that have advanced the furthest in using modern digital channels are technology, media, finance and professional services,” said Matt James, Zenith’s global brand president. “And even within these, brands still rely on traditional media to create broad mass awareness and reinforce brand values.”