Advertising is at the leading edge of change as the world transitions to a digital economy

The mobile device is steadily becoming our primary point of access to all digital services and content. In 2018, 52.2 percent of all worldwide online traffic was generated through mobile phones.

The Global Ad Spends Forecast of Dentsu Aegis Network, a multinational media and digital marketing communications company, sees digital to pass 40 percent of global share as it estimates advertising spend growth of 3.8 percent in 2019.

Growth continues to be dominated by digital channels, with global share breaking through 40 percent for the first time and digital spend overtaking TV advertising to become the leading channel in the US. However, digital’s global share remains well behind markets such as the UK (64 percent) and China (63 percent), suggesting there is room for significant further gains.

Within digital, mobile continues to dominate growth with over a quarter of global spend (29 percent) now delivered through mobile devices. Again, markets such as China — where 76 percent of digital spend is through mobile — suggest the trend has a long way yet to run.

The global forecast reflects a slowing of growth across 10 of the top 13 advertising markets worldwide, with only Canada, India and Japan bucking the trend.  The year 2019 will not benefit from global events such as the Winter Olympics and Paralympics, the FIFA World Cup in Russia and US mid-term elections, all of which drove ad-spend in 2018.

Media trends

Global ad spend is forecast to grow at 3.8 percent in 2019. This is an outlook consistent with 2018’s performance, despite the lack of significant sporting and political events to drive growth.  Digital continues to drive growth and is forecast to increase by 12.6 percent–over three times the rate of all media in 2018.

Digital overtakes TV for the first time this year. It will account for 38.4 percent of total ad spend vs. 35.5 percent for TV, as the shift towards online video, subscriber video-on-demand and catch-up services continues. Worldwide digital media spend was forecast to increase by 12.6 percent in 2018, more than three times the rate of all media, to reach US$230.6 billion—a US$25.7 billion incremental increase compared to the previous year. Programmatic ad spend was expected to grow by 23.2 percent in 2018 and 19.1 percent in 2019 as the ability to consolidate programmatic buying strategies across formats and devices continues to be an opportunity for advertisers to reach the most valuable audiences at scale. 

Paid search’s share of global spend was projected to overtake print (newspaper and magazine) spend for the first time in 2018. However, year-on-year growth rates are pacing slower than total digital growth at 8.9 percent in 2018 and 8.6 percent in 2019. Paid search will continue to account for the largest share within digital with over 36 percent of the overall spend in 2018, however it is Mobile (23.3 percent), online video (24.6 percent) and social media (21.6 percent) seeing the highest increases year-on-year.

Mobile on the go. The mobile device is steadily becoming our primary point of access to all digital services and content.  In 2018, 52.2 percent of all worldwide online traffic was generated through mobile phones, up from 50.3 percent in the previous year, according to Statista. People now spend an unprecedented amount of time on their smartphones — more than five hours a day, according to some estimates. This growth in usage is largely driven by the widespread availability of high-quality digital Video.

Mobile video consumption is exploding among all age groups and content categories. Video growth on mobile-first social platforms will be the biggest driver for digital with video (24.6 percent), mobile (23.3 percent) and social media (21.6 percent) all seeing the highest increases in 2018.

The changing face of TV. Television ad spend was forecast to return to a modest growth rate of 1.2 percent in 2018, following a decline of -0.7 percent in 2017. Growth would be driven primarily by sporting and political events. A further positive increase of 1.1 percent is predicted in 2019. Television ad spend is forecast to evolve and have a modest recovery, driven by new tech developments such as Addressable TV and Connected TV.

Addressable TV is beginning to gain strength, reaching almost 65 million households in the US. This means that advertisers can deliver different ads to different households as they watch the same program in the hope to have a higher ROI. TV viewing also gets more connected. Activities undertaken on a connected TV include Broadcaster catch-up services, clips through websites (Facebook and YouTube) and Online Subscription services (Netflix, Amazon). Streaming digital video on TV has become a daily habit in the US, with 78 percent of Hulu’s viewership occurring on TV. The decline in linear TV viewing is being replaced by other activities taking place on the TV set, with tech assisting this. TV is forecast to remain a powerful media platform commanding US$213.2 billion in ad spend in 2018.

Programmatic ad spend is expected to grow. It grew by 23.2 percent in 2018 and will capture 19.1 percent in 2019. Programmatic media buying, marketing and advertising is the algorithmic purchase and sale of advertising space in real time. During this process, software is used to automate the buying, placement, and optimization of media inventory via a bidding system. Programmatic can consolidate programmatic buying strategies across formats and devices and it continues to provide an opportunity for advertisers to reach the most valuable audiences at scale.

Social media marches on. Given recent concerns about Cambridge Analytica’s use of Facebook data, and ongoing issues relating to brand safety on other social media platforms, you might have expected to see a slight dip in the level of ad spend related to social media. In the near term, however, nothing could be further from the truth. According to our forecasts, social media ad spend will grow at 21.6 percent in 2018. Reflecting this, Facebook advertising revenue in Q1 2018 increased by 50 percent compared to Q1 2017, reaching US$11.8 billion. Looking ahead, it is forecasted that social media ad spend growth will fall to 18.3 percent in 2019, although most likely this is down to a slight “leveling off” of previously stellar growth, rather than linked specifically to any concerns being felt by consumers who continue to embrace social media platforms. Daily Active Users on Facebook reached an average of 1.45 billion as of March 2018, an increase of 13 percent year-on-year.

Newspaper and magazines continue to thrive. The share of newspaper spend will decrease by 1 percent to 8.1 percent in 2018 and 7.2 percent in 2019. Despite good overall audiences, especially due to digital consumption and the demand for high-quality print content, the consumption shift towards digital media has not been fully monetized by media owners. Publishers are investing and preparing their data offering to improve their digital business performance and allow for programmatic buying across media and in real time.  Defensive consolidation is also apparent, witnessed through mergers between press groups like Gravity and Skyline in France. The downward trend in magazine spend continues with ad spend growth forecasts of -6.5 percent in 2018 and -6.4 percent in 2019, with share of spend declining on average 0.5 percent year-on-year to reach 4.5 percent in 2019.

Out-of-home (OOH) has benefited from significant technological innovation in recent years.  Digital displays across all formats have transformed the medium. OOH was forecast to grow by 2.2 percent in 2018 and 2.1 per cent in 2019 to hit US$37.7 billion—a 6 percent share of total global spend.

Radio’s digital offering is growing. The uptake of home assistant devices, such as Amazon Echo and Google Home, has opened different possibilities in how listeners interact with audio advertising. Radio was forecast to grow by 2.0 percent in 2018 and 1.2 percent in 2019 to reach US$37.3 billion — a six percent share of total global spend.

Cinema continues to receive just 0.6 percent of total global spend, however year-on-year growth is strong with 5.9 percent growth forecast in 2018 and 5.2 percent in 2019. Digital is changing the way we engage with cinema, with an emerging trend towards on-demand screening. For example, the Chinese video-streaming giant iQiyi has launched its first on-demand, brick-and-mortar movie theatre with many more planned across the country.

Tim Andree, CEO and chairman of Dentsu Aegis Network, said: “As the world transitions to a digital economy, advertising is at the leading edge of change. Digital connectedness — driven not only by advances in technology, but the speed of consumer adoption — has fundamentally changed the shape of our business and will continue to do so.  Even where digital penetration is highest — such as the UK and China — the trend shows little sign of slowing down.”

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