"Internet display is coming into its own as a brand-building media"

Social media in-feed ads, online video and other digital formats such as paid content and native advertising are leading the growth in global advertising. Not only that, these will drive a 13% annual growth in total display advertising - a category that includes these formats as well as traditional banners, between 2017 and 2019, saidZenith’s latest Advertising Expenditure Forecasts.  

The report also estimates that the total display expenditure will rise from US$96 billion in 2017 to US$126 billion in 2019, accounting for 64% of all the growth in global ad expenditure.

By 2019, total display will account for 50.4% of internet advertising expenditure, exceeding 50% for the first time.

When it comes to internet advertising channel, paid search represented the largest pie until 2015, before it was overtaken by display. Expenditure on paid search totalled US$78 billion in 2016, and Zenith's latest report now forecasts a 10% annual growth to 2019, when it will reach US$103 billion.

Most of this growth is coming from social media (which will grow at 20% a year) and online video (which will grow at 21% a year). It's not surprising, as social media is central to many of its users’ digital lives - it’s where they plan their social life, read their news and document their activities, and this allows brands to use it as a platform to communicate with them very effectively.

Meanwhile, online video is much better at conveying brand values than traditional display formats like banners. The two are no longer mutually exclusive categories, with video advertising is now central to the growth strategies for most social media platforms.

Interestingly, the report also cites that advertisers are finding it makes less and less sense to plan television and online video separately as "they work best as complements rather than substitutes." This is also mainly due to the fact that many consumers nowadays do not differentiate much between their smart TVs and other owned devices (that deliver internet content to households’ main TV sets).

The study added that television supplies reach, while online video offers targeting and personalisation. Together they are becoming more important than ever to advertisers seeking to build brands. Stripping out classified and search, which are essentially direct-response channels - television and online video accounted for 48.5% of expenditure on brand advertising in 2016, up from 43.7% in 2010, and its market share is forecast to rise to 49.3% in 2019.

“Internet display is coming into its own as a brand-building media, powered by social media and online video,” said Jonathan Barnard, head of forecasting and director of global intelligence at Zenith. “But the distinctions between online video and traditional television are being eroded, and the two work together much better than they do separately.”

Global ad spend to grow 4% this year

The report also forecast that global advertising expenditure will grow 4% to US$558 billion by the end of 2017.This is down fractionally from the forecast of 4.2% that it made in June.

"The stronger eurozone economy has yet to feed through to advertising, and we have downgraded our forecasts for seven eurozone markets since then. Mexico’s television market has been disappointingly weak; the extended period of mourning for King Bhumibol Adulyadej has led to a second year of decline for Thailand; and Malaysia’s recovery from the downturn of 2016 has been less rapid than we hoped," Zenith said in a statement.

These disappointments have been partially offset by the boost provided by Canada’s healthy economy to its ad market, and Russia’s return to full growth after the oil-price crash and imposition of trading sanctions," the agency added. It also forecast,

For next year, there'll be a 4.2% growth in global adspend, boosted by the Winter Olympics in Korea, the football World Cup in Russia, and the mid-term elections in the US.

Paid search and classified see slower growth

The growth in paid search is expected to be slower than the growth in total internet advertising, which is at 12% a year. Much of the recent growth in paid search has come from innovations in mobile and location-based search, and future growth is expected to come from adapting search ads to voice-activated personal assistants like Siri and Alexa.

Meanwhile, there's also slowdown on spend with classified advertising, which are ads on dedicated web pages without editorial content, often for cars, house and jobs. Its share of total internet expenditure has been shrinking for many years as users have turned to free listings, auction sites and other substitutes. In 2016, advertisers spent US$17 billion on internet classifieds. This figure is expected to rise by just 7% a year to US$21 billion in 2019.

“Internet platforms are continually innovating to provide advertisers with new ways of communicating with consumers,” said Vittorio Bonori, Zenith’s global brand president. “But newer doesn’t always mean better, and agencies must use all the data and technology available to them to determine how to combine new and old media to tell brand stories most effectively.”