Digital platforms are continually introducing new formats, and retiring old ones, in their pursuit of maximum effectiveness (and revenue). This innovation is the driving force behind the current growth in global adspend.
Social media in-feed ads, online video and other digital formats such as paid content and native advertising are leading the growth in global advertising. Between 2017
and 2020 they will drive 12% annual growth in total display advertising – a category that includes these formats as well as traditional banners. Total display expenditure will rise from US$97bn to US$137bn over this period, accounting for 56% of all the growth in global ad expenditure. By 2029 total display will account for 50.8% of internet advertising expenditure, exceeding 50% for the first time.
Most of this growth is coming from social media (which will grow at 16% a year) and online video (which will grow at 17% a year). Social media is central to many of its users’ digital lives – it’s where they plan their social life, read their news and document their activities – and brands can use it to communicate with them very effectively. And online video is much better at conveying brand values than traditional display formats like banners. These are no longer mutually exclusive categories; indeed video advertising is now central to the growth strategies of most social media platforms.
Paid search and classified are still growing, but are lagging behind
Paid search was the largest internet advertising channel until 2015, when it was overtaken by display. Much of its recent growth has come from innovations in mobile and location-based search, and future growth will come from adapting search ads to voice-activated personal assistants like Siri and Alexa. Expenditure on paid search totalled US$88bn in 2017, and we forecast 8% annual growth to 2020, when it will reach US$111bn. Growth in paid search will therefore lag behind growth in total internet advertising, which will grow at 12% a year.
Classified advertising – advertising on dedicated web pages without editorial content, often for cars, house and jobs – was an important part of the early internet, but its share of total internet expenditure has been shrinking for many years as users have turned to free listings, auction sites and other substitutes. In 2017, we estimate advertisers spent US$18bn on internet classifieds, and we expect this total to rise by just 7% a year to US$22bn in 2019.
Television and online video consolidate their lead in brand advertising
We distinguish between television and online video advertising because they are distributed differently, generally sold differently and categorised differently by third-party agencies that monitor advertising expenditure. But for many consumers they are beginning to blur together as smart TVs and other devices deliver internet content to households’ main TV sets. Advertisers are also finding that it makes less and less sense to plan television and online video separately: they work best as complements rather than substitutes. Television supplies reach, while online video offers targeting and personalisation. Together they are becoming more important than ever to advertisers seeking to build brands. Stripping out classified and search – which are essentially direct-response channels – we estimate that television and online video accounted for 48.7% of display advertising in 2017, up from 43.7% in 2010, and expect its share to rise to 49.0% in 2020.