Advertising spend: digital close to 50% of total spend

Posted by We Are Amnet on November 16th, 2018

Global media advertising spend is expected to have risen by 7.4% to 9 billion in 2018 (eMarketer). Whilst various reports, studies and forecasts cite digital as the primary driver of this growth, there have been some words of caution from industry leaders such as Procter & Gamble. So who do we believe?

Global media spend will grow steadily at just over 5% a year through to 2022. According to eMarketer’s latest number crunching predictions, digital will account for an ever-increasing share of this growth.  Total media ad spend on digital is expected to rise from 43.5% at the end of this year to over 50% in 2020, before leapfrogging the “traditional” advertising mediums in 2021-22. Though it is recognised that there are some considerable political and economic concerns in several markets, as well as increasing data security and regulation concerns, momentum is with digital: increasing digital ad business will sustain overall advertising gains.

Within the UK, preliminary estimates show that mobile ad spends will surpass £5 billion by the end of the year, with total ad spend up 3.5%. This growth is driven by multiple factors: improvements in the traditional ad market and increases – albeit narrower ones in comparison to recent years – in digital and mobile spend. Mobile spending accounts for almost £1 in every £4 spent on advertising, with investment focusing primarily on video and social media. Despite this vast growth, concerns around media transparency and brand safety remain high on the agenda; brands are continuing to review their relationships with agencies amid concerns over issues such as data handling and accountability are high on the CMOs agenda.

Spend is heavily concentrated in North America and Asia-Pacific; the two regions are expected to account for 70.5% of the 9 billion global ad spend this year, boosted by healthy consumer spending. The FIFA World Cup brought a further boost to the Asia-Pacific region – Russia saw a 31.7% increase in advertising expenditure in 2017, and a further 11.9% in the first half of this year (World Advertising Research Centre). Though it was previously forecasted that Asia-Pacific would surpass North American ad spend by 2019, due to stronger than expected growth in North America and currency depreciation against the US dollar, Asia-Pacific is not expected to become the leading ad spend market until 2022.

Whilst robust growth is expected, the recent cuts to digital ad spending by more than 0 million by Procter & Gamble suggest that digital ad spending may grow at a slower rate than some predictions. This is a result of companies streamlining their advertising operations as they gain a better understanding of their most effective strategies. P&G CFO Jon Moeller said the company cuts were a result of a realisation that they “don’t need to be spending money on ads that are placed in inappropriate places”. Therefore, more fine-tuned and targeted advertising operations, including digital advertising, imply a more moderate growth of advertising spend than some predictions.

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We Are Amnet
Joined: November 16th, 2018
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