Amid growing industry speculation about cuts to digital advertising budgets, we have found no
evidence that advertisers as a whole are shifting budgets away from online advertising –in fact, its
share of global advertising expenditure continues to rise rapidly.

We forecast that advertisers will spend 40.2% of their budgets on online advertising in 2018, up from 37.6% in 2017. This growth in spend is part of the wider process of digital transformation, as advertisers invest in technology, data and innovation to revolutionise their relationships with

The concerns of global advertisers about the effectiveness of some digital media investments and the safety of the digital environment have been widely reported. However, a number of Zenith’s global research projects link brand experience impact and brand growth to progressive use of
digital throughout the consumer journey.

New research from Zenith demonstrates the value of investing in transformational digital marketing. We created a standard index of brand growth, comparing results from prominent studies and matching brand performance with a series of communications and media benchmarks. Initial findings indicate that the fastest growing brands within categories such as communications, financial services and automotive tend to perform strongly on measures such as share of category search and website traffic; along with effective content marketing and strong performance in earned digital media. For automotive brands, for example, there’s an 89% correlation between their ability to rise up the index and the traffic to their websites. For financial services brands, rising up the index has a 71% correlation with the popularity of their owned content, and for communications brands it has an 81% correlation with how much of their revenue they spend on advertising.

We have also seen clear correlations between brands with high capabilities in marketing and media, and categories in which digital channels have high influence on the consumer journey. This suggests a positive reinforcement between the recognition of the digitisation of consumer behaviour and
the positive transformation of marketing organisations. Globally, advertisers continue to increase the share of their budgets allocated to paid digital channels. Online advertising grew by 13.7% in 2017 to US$204bn. It accounted for 37.6% of global advertising expenditure in 2017, up from 34.3% in
2016. This year we expect online advertising’s market share to exceed 40% globally for the first time, reaching 40.2%. In 2017 online advertising already accounted for more than 55% of adspend in three markets (China, Sweden and the UK), so there is plenty of potential for further growth. By 2020
we expect online advertising to account for 44.6% of global adspend.

Of course the rise in online advertising tells only part of the story of digital transformation. Rapid as the rise of online adspend has been, the rise of advertising tech has been much faster. Zenith tracked the revenues of 14 listed ad tech companies between 2010 and 2016, and found that their revenues grew five times faster than online revenues over this time. Companies have also invested heavily in innovation
– since 2010, companies in the OECD have increased their investment in research and development three times faster than they have increased their adspend.




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