Online advertising spend is creeping slowly but surely towards the 50 per cent mark of total global ad spend, according to the latest forecasts by Zenith. It is now predicting that by 2021 online spend will reach 49 per cent of the total market, representing around US$329 billion.
In Australia the 2021 share is expected to be above 60 per cent but some slow down is expected – a trend supported by the latest data from ACMA.
Zenith was tipping 47 per cent by 2021 but stronger than expected internet advertising last year has led the digital agency to revise its figures.
“We have upgraded our forecasts after internet ad spend markedly exceeded our expectations in 2018. We now estimate that internet advertising grew 16 per cent last year, up from our previous forecast of 12 per cent,” the company said in a statement.
Zenith is expecting internet advertising will exceed a quarter of a trillion dollars for the first time this year.
The growth is largely being driven by online video and social media, according to Zenith. Paid search and classifieds, while still growing, are lagging other forms of digital advertising. Digital platforms like Facebook and Google are also lowering the bar for access creating an influx of advertising dollars from smaller players, according to Zenith.
Local market instability
While the US is driving most of the global growth (it represents 37 per cent of all global ad spend), the local market appears more volatile, according to Zenith’s forecasts.
Zenith analysts note the recent per capita recession, falling consumer confidence and retail sales, the impact of foreign multinationals, the fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the upcoming federal election as potential major factors for the local advertising market.
“All things considered, from an advertiser perspective we anticipate any potential leap towards austerity being countered by the fight to maintain market share, particularly in the retail and auto sectors,” said Elizabeth Baker, Sydney Head of Investment, Zenith.
“Government advertising has also started to enter the market and will be felt across TV and radio in particular. Similarly, domestic banks will have to re-enter the advertising market later in the year as they seek to regain trust and mitigate customer switching in the wake of the Royal Commission. Overall, Australian ad spend is likely to grow to the tune of around three per cent every year until 2021.”