By 2016 internet advertising accounted for 34% of global ad budgets but produced 35% of brand experience. Internet advertising is now therefore working harder than advertising in other media. This says the latest Zenith’s Advertising Expenditure Forecast published today.
For many years Zenith’s Advertising Expenditure Forecasts reports have consistently showed sizeable increases in the Internet share of advertising budgets.
For the first time Zenith has been able to demonstrate the ROI of internet adspend, not just its scale. The agency used its proprietary Touchpoints ROI Tracker tool to compare Internet adspend to iInternet brand experience over the past few years.
“Internet advertising is the biggest advertising medium in the world and the biggest driver of growth,” said Jonathan Barnard, Head of Forecasting and Director of Global Intelligence at Zenith. “Our unique research shows that brands are starting to use it effectively after struggling to adapt over the last few years.”
Until 2015, brands struggled to make effective use of internet advertising, and their spend was not matched by the resulting ‘brand experience’ (an accurate proxy of market share*). This is the issue no more since 2016.
Zenith’s Report says as well that Internet advertising’s share of global adspend to continue to rise, reaching 40% in 2018 and 44% in 2020 with total value rising from $203Bn in 2017 to $225Bn by 2020 and 5 big platforms (Google and Facebook, plus the Chinese platforms Baidu, Alibaba and Tencent) capturing most of the digital adspend.
In the most advanced markets (Sweden and the UK) it will account for more than 60% of total expenditure next year, and it will account for between 50% and 60% in another six (Australia, Canada, China, Denmark, Norway and Taiwan). Zentith’s Forecast also shows how big cities are driving digital adspend.
Digital adspend going to big platforms
The Internet is driving the great majority of global growth in advertising. It will account for 94% of the growth in adspend between 2017 and 2020.
And most of this will be captured by just five big platforms: Google and Facebook, plus the Chinese platforms Baidu, Alibaba and Tencent.
These five platforms, together considered, increased their share of global Internet adspend from 61% to 72% between 2014 and 2016, and captured 83% of the growth in Internet adspend over that time. Baidu, Alibaba and Tencent accounted for 54% of the growth in internet adspend in China, while Google and Facebook accounted for 96% of the growth in Internet adspend in the rest of the world. Between them Google and Facebook accounted for 76% of Internet adspend outside China in 2016.
Big cities pushing adspend growth
Big cities are driving global adspend by concentrating growth in productivity, innovation and trade. At Zenith they have conducted a unique study that attributes adspend to individual cities by estimating the value of their inhabitants to local, national and international advertisers.
The forecast is that the top 10 cities alone will contribute 12% of all global adspend growth this year, and that the top 725 will contribute a 60%.
Between 2016 and 2019, adspend in the 10 biggest-contributing cities will grow by a total of $7.5Bn, the11% of growth over these years. The mentioned 10 cities will be, in descending order: New York (where adspend will grow by US$1.4bn), Tokyo, Jakarta, Los Angeles, Shanghai, Houston, Dallas, Beijing, London and Chicago (which will grow by $0.6Bn).
Advertisers less optimistic on their brand growth
Advertisers are feeling pressure from the rapid transformation of their businesses,
exemplified by the rapid shift of marketing communications to online media in response to changing consumer behaviour, and the polarisation of growth to big platforms, big countries and big cities.
Zenith’s third series of surveys about brand growth among key clients conducted at the end of November
showed an average response at 57, down from 67, this time last year (On a scale from 0 to 100, 0 means everyone expects decline in 2018, 100 means everyone expects growth, and 50 means the average expectation is for no growth).
Food and drink brands have been the least affected, with a score of 66 this year, down just a point from 67 last year.
Packaged goods, retail and telecom brands have all fallen to 50, expecting no growth, down from positive scores last year.
“We are seeing a battle played out in business, marketing and media between big players and small players,” said Vittorio Bonori, Zenith’s Global Brand President. “Growth is coming from big countries and big cities, and being captured by big platforms. Brands should focus on upstream strategy, data-informed UX planning and downstream automation”.
Image over the headline.- © Zenith
