As a result, according to Zenith’s Advertising Expenditure Forecasts, it will exceed the 50% mark for the first time, compared to 44% in 2018 and the 47% forecast for this year. However, the growth rate is falling rapidly as the internet ad market matures. It stood at 18% in 2018 and is forecast to fall to 12% this year and 9% in 2021. Zenith notes that internet ad spend growth is led by the overlapping channels of online video and social media, which are expected to grow at average rates of 18% and 17% a year, respectively, to 2021.
However, other channels are growing much less rapidly. Paid search, which accounted for 37% of internet ad spend in 2018, grew by 11% that year, and Zenith forecasts its growth rate to fall to 7% in 2021.
Zenith also notes that much of the growth in internet ad spend 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.
Matt James, Zenith’s Global Brand President, said: “The categories that have advanced the furthest in using modern digital channels are technology, media, finance and professional services.
“And even within these, brands still rely on traditional media to create broad mass awareness and reinforce brand values.”
Zenith forecasts global ad spend to grow by 4.6%, or $28 billion, this year to reach $639 billion. Almost half this growth ($13 billion) will come from the US, which is benefiting from very rapid growth in internet advertising – at15.4%, ahead of the global average of 11.7%. China will be the next biggest, adding $4 billion in extra ad spend, followed by the UK and India, with $1 billion each.
Jonathan Barnard, head of forecasting at Zenith, added: “The point at which internet advertising exceeds 50% of global adspend has been approaching for some time, but this is the first time it has appeared in our forecasts.
“However, 2021 will be the first year of single-digit internet ad spend growth since 2001, the year the dotcom bubble burst.”