The internet is still the fastest growing advertising medium by some distance. As our global Advertising Expenditure Forecasts show, it grew 17.1% in 2013, and we forecast an average of 16% annual growth for 2014 to 2016.
Display is the fastest-growing sub-category, with 21% annual growth forecast to 2016, thanks partly to the rapid rise of social media advertising, which is growing at 30% a year. Here we include traditional display (such as banners), online video and social media. Improved advertising formats are making internet display more interactive and attention-grabbing, while programmatic buying is evolving to allow more sophisticated targeting of display audiences ever more efficiently. Measurement agencies are investing in research that should measure consumers’ exposure to traditional display ads more accurately, and track their exposure to video ads across desktop computers, tablets and television screens. Some broadcasters are starting to trade packages that include both online video and television spots; online video is also starting to be sold by programmatic buying, providing advertisers with more control and better value. We forecast online video to grow at 24% a year for the rest of our forecast period.
We expect paid search to grow at an average rate of 14% a year to 2016, driven by continued innovation from the search engines, including the display of richer product information and images within ads, better localisation of search results, and mobile ad enhancements like click-to-call and geo-targeting. Paid search is also becoming addressable, as platforms give advertisers more control over where, when and to whom their ads are exposed.
Online classified has been subdued since the downturn in 2009; after the initial shift from print to digital, classified publishers have had to compete with new paid-for and free alternatives for matching buyers and sellers. We forecast average annual growth of just 7% for the rest of our forecast period.
Internet adspend by type 2013-2016 (US$ billion)
Mobile advertising (by which we mean all internet ads delivered to smartphones and tablets, whether display, classified or search, and including in-app ads) has now truly taken off and is growing six times faster than desktop internet. We forecast mobile advertising to grow by an average of 51% a year between 2013 and 2016, driven by the rapid spread of devices and improvements in user experiences. By contrast we forecast desktop internet advertising to grow at an average of 8% a year.
We estimate global expenditure on mobile advertising at US$14.4 billion in 2013, representing 13.8% of internet expenditure and 2.9% of total advertising expenditure (this total excludes a few markets where we don’t have a breakdown by medium). By 2016 we forecast this total to rise to US$49.5 billion, which will be 30.4% of internet expenditure and 8.6% of all expenditure. This means mobile will leapfrog radio, magazines and outdoor to become the world’s fourth-largest medium by the end of our forecast period.