Computers and artificial intelligence have come along at an exponential rate over the past few decades, from being regarded as oversized adding machines to the point where they have played integral roles in some legitimately creative endeavours.
Internet advertising will surpass traditional TV advertising globally for the first time this year while social media is set to beat out newspapers by 2019, the latest Zenith Advertising Expenditure Forecasts reports.
The latest report predicted Internet advertising will attract 36.9 per cent of all advertising expenditure in 2017, up from 34 per cent in 2016, reaching US$205bn. This is $12bn more than what will be spent on traditional TV this year ($192bn).
Because it’s already taking up such a larger portion of the pie, Zenith said growth in Internet advertising is, however, slowing. Internet ad spend is projected to rise by 13 per cent this year, down from 17 per cent in 2016 and 20 per cent in 2015, and by 12 per cent in 2018, then 10 per cent in 2019.
In Australia, the advertising market finished the 2016 year with growth of 3.8 per cent, slightly higher than original forecasts. Digital was not surprisingly the big driver, and locally experienced growth of 15 per cent. Mobile and online video expenditure were key contributors.
In contrast, TV revenue was down 3.9 per cent in 2016. But the biggest loser was print, which dropped 13.4 per cent over the same period to represent just 11 per cent of total ad spend. Magazines were also down significantly, falling 17.7 per cent.
In fact, Zenith forecast social media advertising expenditure is now tipped to surpass newspaper advertising by 2019, reaching US$55bn against a project spend on printed newspapers of $50bn. Within the Internet advertising category, social is also the fastest growing component, rising by 51 per cent in 2016. According to the report, social is expected to continue to grow at an average rate of 20 per cent a year to 2019.
Despite print’s decline, other traditional ad formats chalked up gains in 2016, most notably, out-of-home, which lifted 7.9 per cent off the back of the transformation to digital screens and growth in inventory. Radio also saw an increase of 5.8 per cent, buoyed by increased spend from retail and automotive brands.
Zenith Australia CEO, Nickie Scriven, said the group is forecasting 2017 ad spend growth to be 3.4 per cent, with digital the main driver again of growth. “Radio and out-of-home growth will moderate slightly and we continue to forecast declines in TV and print,” she said.
Zenith’s revenue forecast for 2017 meanwhile, is behind 2016 but still at 2 per cent.
“Overall consumer confidence is flat, with consumers having a cautious outlook around economic indicators like cost of house, rising commodity costs and unemployment growth,” Scriven said. “Despite this, major advertising categories like retail, automotive, finance and travel continue to have modest growth in their spend.”
Overall, Zenith expected the global ad market to continue to grow at between 4-5 per cent a year over the next three years, reflecting a growth pattern that’s been in play since 2000.
To coincide with its ad expenditure report, Zenith also revealed the results of a new study into attribution of advertising spend across individual cities. The report was based on estimating the amounts spend targeting inhabitants of these cities and surrounding metropolitan areas by advertising in local, national and international media.
According to Zenith, 10 cities will contribute 11 per cent of all growth in global ad spend between 2016 and 2019: Los Angeles, Jakarta, Tokyo, Shanghai, Manila, Beijing, Dallas and Houston. The group found US$61bn was spent targeting the populations of these 10 locations last year, with that figure expected to increase to $69bn by 2019.