More money now spent on internet advertising than traditional TV

Global internet advertising expenditure will grow 13% to reach US$205bn in 2017. This is according to Zenith's Advertising Expenditure Forecasts. The medium is said to attract 36.9% of all advertising expenditure, up from 34.0% in 2016. This is in the midst of the global ad market growing at a steady pace of 4%-5% a year since the beginning of the decade, and the report expects it to continue to do so through to 2019.The forecast for 2017 is for 4.4% growth, down slightly from 4.6% growth in 2016. The report forecasts another 4.4% growth in 2018, followed by 4.2% in 2019. These rates are slightly below the growth rates that the IMF forecasts for nominal GDP. Internet overtakes traditionalThis will be the first year in which more money will be spent on internet advertising than advertising on traditional television (which will total US$192 billion).Meanwhile, internet ad spend grew 17% in 2016, down from 20% in 2015. The report expects the growth to slow to 13% in 2017, 12% in 2018 and 10% by 2019. However, it is predicted that it will continue to add US$23 billion-US$24 billion a year). In this environment, it is vital that platforms and publishers address advertisers’ valid concerns about viewability and brand safety to secure sustainable growth.In the press statement, Zenith said:As the market matures, advertisers need to know for certain that their ads are being actively viewed by real people in appropriate environments.“Internet advertising has contributed all of the growth in global adspend 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. “Innovation is proceeding as fast as ever, and we believe that this is what will continue to drive brand growth for advertisers,” he said.Social media is also set to overtake newspaper advertising in 2019.The report forecasts that advertising expenditure on social media to reach US$55 billion in 2019, overtaking advertising expenditure on printed newspapers, which will total US$50 billion.Social media advertising is the fastest-growing component of internet advertising – it grew 51% in 2016, and we forecast it to grow at an average rate of 20% a year to 2019. Newspaper advertising, meanwhile, is shrinking by 5% a year as circulations continue to fall.Newspaper ad spend has shrunk every year since peaking at US$113 billion in 2007, and by 2019 will be back to levels last seen in 1985 – and that’s without adjusting for inflation. Note that these newspaper figures only includes advertising in printed editions – newspapers’ online revenues are included in the internet advertising total.Advertising growth is concentrated in big citiesIn recent years, big cities have been the focus of innovation, migration and trade. Their populations are younger and have higher incomes than populations elsewhere, although they also pay a lot more for their housing.As part of a wider project to identify the value of individual cities to advertisers, Zenith has conducted a study attributing advertising expenditure to individual cities. This is by estimating the amounts spent targeting the inhabitants of these cities (and their surrounding metropolitan areas) by advertising in local, national and international media.The report estimated that just ten cities will contribute 11% of all the growth in global ad spend between 2016 and 2019. In descending order of contribution, they are: New York, London, Los Angeles, Jakarta, Tokyo, Shanghai, Manila, Beijing, Dallas and Houston.Last year, US$61 billion was spent targeting the population of these ten cities, and Zenith forecasts this total to rise to US$69 billion by 2019. The top 50 will contribute 27% of total global growth, and the top 250 will contribute 50%. New York is the world’s most important city for advertising, where US$15 billion will be spent this year, followed by Tokyo (US$13 billion), Los Angeles (US$9 billion), London (US$8 billion) and Chicago (US$6 billion).“Population numbers, productivity and disposable incomes are rising faster in cities than elsewhere,” said Jonathan Barnard, head of forecasting at Zenith. As such, city dwellers are becoming more valuable for advertisers seeking growth.