Internet ad spend growth to slow until 2021, but online video and social media continue to drive increases

Anne Freier

In Mobile Advertising. July 9, 2019

Internet ad spend is to account for 52% of global ad expenditure by 2021, up from 47% in 2019 and 44% in 2018, according to the latest Zenith Advertising Expenditure Forecast.

The report highlights that ad spend growth rates continue to decline as the market matures. Whilst ad spend rose 17% in 2018, it is expected to grow by 12% in 2019 and will have fallen to 9% year-on-year in 2021.

“The point at which internet advertising exceeds 50% of global ad spend has been approaching for some time, but this is the first time it has appeared in our forecasts,” said Jonathan Barnard, Head of Forecasting at Zenith. “However, 2021 will be the first year of single-digit internet ad spend growth since 2001, the year the dotcom bubble burst.”

Online video and social media are leading much of the growth spurt, expected to rise an average of 18% and 17% a year until 2021, respectively. This is largely driven by continued investments into the improvement of these channels and associated technologies. Mobile has seen an uplift in connection speeds and investment in improved content.

Meanwhile, 5G technology will be launching in Europe shortly, following roll-outs in the US and South Korea, improving the brand experience further.

Paid search accounted for 37% of Internet ad spend in 2018, but is predicted to fall to 7% in 2021. Online classified ads are also losing out as they shrink from 9% growth in 2018 to just 1.6% in 2021.

Meanwhile, voice and audio advertising could see ad expenditure increases as the industry is beginning to tap into these channels.

“The categories that have advanced the furthest in using modern digital channels are technology, media, finance and professional services,” said Matt James, Zenith’s Global Brand President. “And even within these, brands still rely on traditional media to create broad mass awareness and reinforce brand values.”

According to the report, local and small businesses are driving much of the growth of Internet ad spend on platforms such as Google and Facebook. The overall picture that emerges is one where smaller brands are spending cash online, whilst larger established brands are devoting less than half their budgets to Internet ads.

Overall, ad spend is predicted to increase 4.6% in 2019 to $639 billion. Almost half of this growth is driven by the US ($13 billion), which is seeing a noticeable growth in Internet advertising, followed by China ($4 billion) and the UK ($1 billion) and India ($1 billion).