Zenith research has found the ‘brand experience’ of online advertising has caught up with digital ad spend.
Zenith defines brand experience as a combination of reach and influence - or how likely a message will influence consumer attitudes.
It says the findings show that Internet advertising is now “working harder” than advertising in other media and this demonstrates the ROI of internet ad spend, not just its scale.
Using its ‘Touchpoints ROI Tracker’ tool to compare internet ad spend to internet brand experience over the past few years, it found that in 2014 advertisers spent 27% of their budgets on internet advertising, which produced only 21% of brand experience.
By 2015, brands were using internet advertising more effectively, accounting for 30% of budget and paid brand experience.
Las year, internet advertising accounted for 34% of global ad budgets and delivered 35% of brand experience. Internet advertising’s share of global ad spend is predicted to rise, reaching 40% in 2018 and 44% in 2020.
Its value will rise from US$203 billion in 2017 to US$225 billion in 2020. In the most advanced markets (Sweden and the UK) it will account for more than 60% of total expenditure next year.
The Australian story
In Australia, internet ad spend will capture 52.1% of the market in 2017, ahead of the global average. Zenith forecasts 9.6% growth in internet advertising in Australia in 2018, compared to 3.4% growth for the advertising market as a whole. By 2020, internet will account for 60.3% of total ad spend in Australia.
“In Australia, we anticipate 3.4% ad spend growth year on year to 2020. In 2017 the highest growing categories were automotive brands – driven by many new car launches and an increase in luxury car advertising; retail – despite the substantial decline in October; and restaurants,” Zenith chief executive Nickie Scriven said.
“Ad spend growth is predominantly being driven by the ever growing fragmentation of the media landscape, with digital media now accounting for 52% of ad spend in Australia and forecast to grow by a further 10% in 2018.
“Google and Facebook are the main benefactors of this growth and this is likely to continue to 2020. Out-of-home continues to buck the trend and post year on year growth, buoyed by the digitisation of panels, inventory growth and investment in tech.”
Five tech titans dominate growth
The internet is driving the great majority of global growth in advertising and will account for 94% of the growth in ad spend between 2017 and 2020 – a grim outlook for the rest of the media.
As Scriven points out, most of this will be captured by five big platforms – predominantly Google and Facebook, plus the Chinese platforms Baidu, Alibaba and Tencent.
These five platforms will increase their share of global internet ad spend from 61% to 72% between 2014 and 2016, and captured 83% of the growth in internet ad spend over that time.
Baidu, Alibaba and Tencent accounted for 54% of the growth in internet ad spend in China, while Google and Facebook accounted for 96% of the growth in internet ad spend in the rest of the world.
Between them Google and Facebook accounted for 76% of internet ad spend outside China in 2016, which is 8 percentage points below a recent prediction by GroupM.
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