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Zenith: After TV, Internet advertising to drive overall growth in adspend

Zenith: After TV, Internet advertising to drive overall growth in adspend

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Internet advertising will drive 4.7% growth in total global adspend in 2019, according to Zenith’s Advertising Expenditure Forecasts. About 4% ahead of the initial forecast, the study said that there will be 4.6% growth in both 2020 and 2021.In its report, Zenith said that it upgraded its forecasts after internet ad spend exceeded last year's expectations. The estimate of the internet adpsend total in 2018 has now increased from US$231bn to US$246bn. As such, the report predicts an average of 10% growth a year to 2021, up from its previous forecast of 9%.This growth is attributed to the overlapping channels of online video and social media, which is expected to grow by 19% and 14% a year to 2021 respectively. The study forecasts display advertising as a whole – which encompasses video and social, as well as banners – to grow by 13% a year, while paid search and classified lag behind, growing at an average of 7% a year each.We regularly examine the growth rates of different regional blocs defined by the similarity of the performance of their ad markets as well as their geographical proximity. This captures the behaviour of different regional ad markets more effectively than looking at regions defined purely by geography, such as Western Europe, Central & Eastern Europe and Asia Pacific. See the end of the Executive Summary for a complete list of countries by bloc.In Asia, characterised by economies that are growing rapidly as it adopts existing technology and practices and innovate new ones, it has seen high single-digit or double-digit growth since 1996. The report said that despite slow growth in some of the region’s markets, notably China, there will still be a growth of 6.8% a year to 2021. Albeit less rapid than the growth in Eastern Europe and Central Asia, the growth still contributes a lot more to global adspend growth in dollar terms, the report added.Forecast by leading advertising marketsAccording to Zenith's report, the United States will be the leading contributor of new ad dollars to the global market over the next three years, followed by China. Between 2018 and 2021, the report forecasts global advertising expenditure to increase by US$87bn in total. The United States will contribute 37% of this extra ad expenditure and China will contribute 19%, followed by India (5%) and Indonesia and the UK (3% each).The Zenith report said that six of the ten largest contributors will be rising markets such as China, India, Indonesia, Brazil, Russia and South Korea, and the markets will contribute 34% of new adspend over the next three years. Overall, the forecast from these markets are said to contribute 50% of additional ad expenditure between 2018 and 2021, and to increase its share of the global market from 37% to 38%.Since it began in the mid-1990s, internet advertising has principally risen at the expense of print. Over the last ten years internet advertising has risen from 12% of total global spend (in 2008) to 42% (in 2018), the report said. Meanwhile newspapers’ share of global spend has fallen from 25% to 8%, while magazines’ has fallen from 12% to 4%.Zenith's forecast said that print titles will continue to lose market share as its readers continue to move to online versions of the print brands or other forms of information and entertainment entirely. Hence, newspapers and magazines will shrink at average rates of 5% and 7% a year respectively, ending with respective 6% and 3% market shares in 2021.Television was the dominant advertising medium between 1996 (when it overtook newspapers with a 37% market share) and 2016 (when it attracted 35% of total advertising expenditure). In 2017, however, the internet overtook television to become the largest advertising medium. Looking at the ad market as a whole, including search and classified, the report said that television’s share peaked at 39.1% in 2012, fell to 31.9% in 2018, and will be 28.5% in 2021, its lowest share on record.However, the report attributed one of the reasons for television’s loss of share to the rapid growth of paid search, which is essentially a direct response channel (together with classified), while television is the pre-eminent brand awareness channel. Television does not compete directly against search, and the two can complement each other. But taking internet classified and search out of the picture, television will remain the principal display medium for many years to come, the report said. Television accounted for 40.4% of display expenditure in 2018, and will attract 36.9% in 2021.Considering audiovisual advertising as a whole – television plus online video – the report highlighted that television offers unparalleled capacity to build reach, while online video offers pinpoint targeting and the potential for personalisation of marketing messages. Both are powerful tools for establishing brand awareness and associations.According to Zenith, audiovisual advertising accounted for 47.9% in 2018, up from 43.5% in 2010, and expect its share to rise to 48.1% in 2021.According to the report, internet display is the main driver of global adspend growth, driven by the (overlapping) expansion of social media and online video. Zenith forecasts internet display, search and classified advertising to contribute US$82bn in extra adspend between 2018 and 2021. This growth will be mitigated by a US$11bn decline from print. Among the ‘traditional’ media, out-of-home will see the biggest growth, followed by television, the report added.Jonathan Barnard, Zenith’s head of forecasting and director of global intelligence said that internet advertising will exceed a quarter of a trillion dollars for the first time this year. He added that the speed of internet adspend growth continues to "surprise" the team, as small businesses and digital challengers provoke established brands to up its game.“Brands with more than a niche market share still need interuptive advertising at scale to acquire new customers. As more communication takes place online, the challenge for brands is to build distinctiveness through frequent short-term exposure, rather than the occasional but longer exposures common to traditional media," Ben Lukawski, Zenith’s global head of strategy said.

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