Ad revenue growth is slowing. The major forecasting firms have revised their global growth predictions for 2019 downward compared to 2018. Consensus estimates put digital ad revenues at or near 50% this year. And local revenues (including traditional media) are expected to reach $149 billion according to BIA Advisory Services (formerly BIA/Kelsey).
Zenith, part of Publicis Media, projected that by 2021 digital advertising will represent 52% of global ad spending. This year it expects digital to be 47% of the global adspend up from 44% in 2018. Internet ad growth will decline from 17% in 2018 to 12% this year. Overall ad spending growth, lead by the US, will be 4.6% according to the firm.
Zenith says that most large advertisers are still focused primarily on traditional media and that digital ad growth is being driven substantially by SMBs globally:
Much of the growth in internet adspend is coming from small, local businesses that spend all their budgets on platforms like Google and Facebook, which offer simple, self-serve tools to manage campaigns, and highly targeted audiences. The fact that large numbers of small advertisers are spending all their budgets online means they are skewing the overall picture. The global average is made up of very many small advertisers that spend all their budgets online, and large advertisers that – on average – devote considerably less than half their budgets to it. Big brands are investing large sums in internet advertising, but the majority are still spending most of their budget in traditional media.
In the US, BIA agrees that traditional media will still represent the majority of local ad spending (60%), at $89.2 billion. Local digital ad revenues, which include large and small advertisers, will reach $59.5 billion. However, BIA expects 9% compound annual growth for digital through 2023, while traditional media will see negative growth of 1.4%. (We’re likely to have a recession in the next 2 – 3 years, which may cut growth significantly).
Here is the BIA local ad revenue breakdown by medium:
- Direct Mail: $37.2 billion (includes coupons and catalogs)
- Video: $29.5 billion (includes OTT, local cable, local online video, out-of-home video, mobile video)
- Mobile: $21.8 billion
- Desktop/Tablet: $20.2 billion
- Radio: $14.5 billion
The above represent about 70% of the forecast. The remaining 30% is comprised of newspapers, out-of-home, directories, social and local magazines.
Google and Facebook, the biggest beneficiaries of digital ad spending, will be under pressure to find new revenues as digital growth declines over the next several years.