Report by Andrew Birmingham
Ring the bell, the war is over. Almost. 21 years after the little browser that couldn’t – Netscape – changed the way we consume content forever, digital media will finally emerge as the world’s largest advertising category in 2018 according to a new report.
The study, called Global Advertising Forecasts and produced by Magna Global fell off the back of a passing futon van and into our lap as we were enjoying our third soy Piccolo on a chilly Sydney morning, made by the charming and delightful baristas of Brooklyn Hide in Surrey Hills. And it’s the kind of report that will warm the cockles of the good hipsters of Australia’s own Silicon Gully quarter when they stop reading Monocle just long enough to scan the numbers.
While traditional advertising spending will decline by 0.8 percent next year lead by the continuing self immolation of newspapers and magazines, digital media will surge by another 15.8 per cent.
Across the globe, $US518 billion will be pumped into media owner advertising. The US remains clearly the world’s largest market at $163 billion and will remain in the top spot for many years to come, based on US dollar pricing parity comparisons. China and Japan are firmly locked in at 2nd and 3rd but both markets combined will still be barely half the size of the US in three years time.
Australia maintains its 9th place spot this year and is likely to stay there at least in the foreseeable future, just behind Canada, which, let’s face it, is not even a real country anyway.
The world’s other great emerging market, India, will finally crack the top 10 in 2019.
All about the pixels
But the real story, as it has been for two decades now, is digital.
(Image source: Magna Global)
According to the report’s authors, “Digital media advertising is expected to grow by double-digits again this year again (+16 per cent to $149 billion) driven by mobile advertising (+53 per cent at $50.0bn), video formats (+38 per cent at $15.4bn) and social formats (+38 per cent at $22.7bn). Global digital revenues will reach 31 per cent market share globally this year. Mobile advertising now accounts for 30 per cent of total digital advertising and will reach 55 per cent by 2019.”
They note that digital media was already the top media category in 2014 across 13 of the 73 markets analyzed by Magna Global, including the UK, Australia, Canada, Germany, China, Sweden and the Netherlands.
“This number will grow to 14 in 2015 and to 23 by 2018. Based on our long-term forecasts, digital media will catch up with television in 2018, when digital media reaches 38.0% of global ad revenues compared to TV’s 37.7 per cent share. This is one year earlier than previously forecast. In the US, digital will outgrow television revenues by 2017.”
Search is king, still. Globally, it remains clearly the biggest ad format, with 54 per cent of total digital dollars, according to the report. “Display remains second but social grows faster and now represents 13 per cent, nearly two thirds of it generated through mobile platforms.”
The authors note that market shares are very different when comparing desktop and mobile environments. “Display accounts for 27 per cent of desktop ad dollars but only 13 per cent of mobile ad dollars.”
Mobile digital advertising claimed almost a quarter of the digital dollars and will claim a clear majority of the spending by 2019. “Mobile advertising (across all formats) will grow by 33.5 per cent per year over the period 2014-2019.”
Again – and despite some alarmist predictions to the contrary- search will continue to dominate. It will claim 48 per cent of mobile advertising while social will garner 31 per cent. Alas, and despite the hype, display and video formats will continue to lag behind due to their inherent limitations such as screen size and bandwidth, according to the study.
Rise of the machines
Programmatic advertising continues to gather share. Combined real time bidding (RTB) and non RTB platforms will deliver the majority of display digital display ads in 2015 – at least in the most advanced 11 markets that Magna Global tracks in its Programmatic studies.
“Programmatic transactions now account for nearly half (46 per cent) the media transactions in non-search digital media. Approximately half of programmatic (i.e. a quarter of total inventory) is transacted through Real Time Bidding (RTB). Total Programmatic will grow to represent 70 per cent of dollar transaction by 2019. By then only non-standard (native) formats or premium display/video inventory will stay entirely out of programmatic buying reach.”
In the Asia total advertising spend grew by 6.2 per cent in 2014 to reach $138bn according to the study. And it will grow by roughly the same rate in 2015 to reach $147bn.
“This will push APAC past EMEA to be the second largest global advertising region by spend, behind only North America.”
Forecasts have been pared back slightly for the region though after the IMF reduced its nominal GDP growth expectations for APAC down from 7.7 per cent. Despite this, APAC remains one of the fastest growing advertising economies on a global basis, ahead of North America and Europe says the authors.
And no wonder the cafes are packed in Surry Hills with the outlook for Australian advertising decidedly gimlet eyed. Total ad spending will grow 3.8 per cent next year to reach $12bn.
According to the report, “Australia remains one of the most mature and intense advertising markets, with ad spend per capita passing $500 this year, which is the fourth highest global total trailing only Norway, the United States and Switzerland.”