Worldwide Internet advertising spend is set to grow 13% to $205 billion in 2017, according to Zenith Media’s latest Advertising Expenditure Forecast.
Internet ads are attracting almost 40% of all expenditure – a 6% increase from 2016. That makes 2017 the first year when more cash goes to online ads than traditional TV (totaling $192 billion).
However, overall the growth rate of Internet ad spend is slowing down. Whilst 2015 saw an increase of 20%, it was down to 17% in 2016 and Zenith expects it to drop to 13% this year and 12% in 2018. If viewability and measurement issues are addressed in time, there’s an opportunity for more sustained growth in the industry,
The report further predicts social media spending to reach $55 billion in 2019, ahead of printed ads at $50 billion. Zenith says that social media advertising is one of the fastest growing sectors of digital advertising, having jumped 51% last year. Meanwhile, newspaper advertising continues to decline.
Vittorio Bonori, Zenith’s Global Brand President says that Internet advertising has been a rather dominant contributor to overall ad spend growth and it’s been boosted by technological innovations.
“Innovation is proceeding as fast as ever, and we believe that this is what will continue to drive brand growth for advertisers.”
Not surprisingly, bigger cities are driving the trend with increased innovation, migration and trade. Here, populations tend to be younger with higher incomes. The report estimates that just ten cities including New York, London, Los Angeles, Jakarta, Tokyo, Shanghai, Manila, Beijing, Dallas and Houston will contribute 11% to the overall growth of global ad spend between last year and 2019.
In 2016, $61 billion were spent to target the populations in these cities and expenditure is forecast to reach $69 billion in 2019. New York leads the table with a predicted spend of $15 billion in 2017, followed by Tokyo at $13 billion, LA at $9 billion and London at $8 billion.
Jonathan Barnard, Head of Forecasting at Zenith, explains:
“Population numbers, productivity and disposable incomes are rising faster in cities than elsewhere. So city dwellers are becoming more valuable for advertisers seeking growth. Big cities are now driving growth in ad spend.”