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Tag: James McDonald

  • WARC downgrades expectations as economic slowdown bites and social companies stal

    Global adspend to rise 8.3%, but growth to slow significantly in 2023: WARC

     

     

    By Our Staff

     

    Global advertising spend is on course to rise by 8.3% – or $67.3bn – to $880.9bn this year, reports WARC, lifted by a positive first half for holding companies and a boost from cyclical events in the second, most notably the US midterm elections and the men’s FIFA World Cup in Qatar this November. Market growth is then set to ease significantly – to 2.6% – in 2023, as investment is inhibited by cooling economic conditions and third-party cookie blocking online.

     

    The new projections, based on data from 100 ad markets worldwide, amount to a downgrade of 4.3 percentage points (pp) to 2022 growth and 5.7pp to 2023’s prospects, compared to WARC’s previous global forecast in December 2021. Taken together, the new forecasts represent a reduction of almost $90bn in growth potential for the global advertising market this year and next.

     

    Advertising holding companies – which serve many of the world’s biggest brands – have recorded a positive start to 2022, with all major firms upwardly revising forward guidance for the year ahead. Conversely, small to medium-sized businesses (SMBs), who largely buy ad space directly, are bearing the brunt of worsening economic conditions. A slowdown in SMB advertising activity will impact social media companies most – a sector already struggling to grapple with the impact of Apple’s new privacy measures. WARC expects social media ad spend to rise 11.5% this year (compared to +47.1% in 2021) then ease to just 5.2% in 2023 – the slowest rate yet for the sector.

     

    Aside from businesses, consumers are also feeling the squeeze of soaring price inflation. This is particularly true among low earners for whom energy and food costs comprise a higher proportion of income. Wealthier consumers, however, have seen the value of their assets appreciate in recent years and are more likely to have received above-inflation pay rises – spending intentions among high earners remain bullishly positive per Deloitte monitoring. Sectors like technology & electronics (+11.5% in 2023), pharma & healthcare (+7.5%) and household & domestic (+6.5%) are expected to post healthy increases in advertising investment to capture any available disposable income.

     

    Social media’s $40bn shortfall

    Apple’s move to block third party cookies across its 2bn devices – which are used by 12% of the global population (860m people) – has already had an adverse impact on the social media companies which rely on third party data, most notably Facebook-parent company Meta.

     

    WARC believes that Apple’s privacy push – aside Google’s delayed move to block third party cookies from its Chrome browser (66% global market share) – will remove close to $40bn from the bottom line of these social media companies over the course of this year and next. A recent survey of over 1,500 practitioners for WARC’s Marketer’s Toolkit found that only a third (34%) of respondents felt fully prepared for a post-cookie advertising market.

     

    Meta recorded its first annual decline in advertising income during Q2 2022 and WARC believes its full year growth will be flat over the forecast period, as the Instagram platform stymies ongoing losses from the core Facebook platform this year and next. TikTok (+41.5%), Snap (+5.8%) and Twitter (+2.7%) are all expected to record growth next year, but at a far slower rate than historically seen, while a number of Chinese platforms are set to record losses.

     

    Very few product sectors are cutting advertising investment

    Of the 18 product sectors monitored by WARC, all bar automotive are on course to increase advertising spend this year. Only four sectors are expected to cut spend in 2023; transport & tourism (-0.4%), alcoholic drinks (-1.1%), financial services (-4.5%) and automotive (-12.4%).

     

    The technology and electronics sector – the third largest of the 18 monitored by WARC – is forecast to lead growth this year and next (+25.0% in 2022 and +11.5% in 2023), culminating in a total spend of $85.1bn by 2023. The pharma & healthcare sector then follows, with expected growth of 11.0% this year and a further 7.5% in 2023, by when investment will have topped $60bn globally.

     

    Retail – the largest sector monitored by WARC and which includes Amazon, the world’s largest advertiser by spend – is set to increase advertising investment by 6.8% this year and 3.6% next year despite retailers seeing tighter margins from inflationary pressures. The automotive sector, however, is bedogged by both supply- and demand-side pressures and is the only sector set to cut advertising spend in both 2022 (-5.3%) and 2023 (-12.4%).

     

    AVOD market heats up as streaming becomes war of attrition

    Advertising spend in the video streaming sector is set to grow faster than the total ad market this year (+8.4%) and next year (+7.0%). Within this, the advertising-funded video on demand (AVOD) sector – which includes the likes of Hulu, Amazon Prime Video and YouTube – is expected to rise 8.0% this year and then a further 7.6% in 2023 to reach a value of almost $65bn.

     

    Aside from the social media players, YouTube’s fortunes have also proven vulnerable to privacy changes on Apple devices; WARC believes that YouTube’s advertising revenue will rise 7.3% this year (compared to a 45.9% in 2021), but that its growth will then ease to 5.6% in 2023. This would give the company 39.4% of the global AVOD market, a declining share (down 0.9pp from 2021) as competition heats up with the introduction of advertising to Disney+ and Netflix later this year.

     

    There is already evidence of saturation in the streaming market, particularly in the US, with audiences now using seven streaming services on average (compared to the global average of five). Consequently, new entrants are just as likely to be fighting for existing advertising spend as they are for incremental dollars, which could hinder overall growth of streaming operators in the short- medium-term.

     

    Streaming services owned by broadcasters (BVOD) are also set to grow their advertising income this year (+9.7%) and next (+5.2%), but from a far lower base (reaching $18.5bn in 2023). Linear TV is set to benefit from cyclic sporting and political events this year, raising advertising investment by 3.6% to $180bn (20.4% of all advertising spend) but the market is then on course to record a 4.5% loss in the absence of these events next year.

     

    Summing up, James McDonald, Director of Data, Intelligence & Forecasting, WARC, and author of the research, says: “With the growth rate of global output now set to halve and acute supply-side pressures fanning inflation, the economic slowdown has removed close to $90bn from global ad market growth prospects this year and next. Yet brands are still spending as the Covid recovery continues, and global ad trade remains on course to top $1trn in value by 2025. Platforms with rich sources of first-party data – most notably Amazon, Google and Apple – are well placed to weather future headwinds by offering measured performance in a climate where return on investment becomes paramount.”

     

  • Advertiser spend on TV and social media is twice as high as daily consumption

    WARC Global Advertising Trends: The Investment Gap

    By Our Staff

     

    A new WARC analysis of advertising spend forecasts for 100 markets worldwide and the results of a survey by GWI of more than 715,000 consumers, show that advertiser spend on TV and social media is highly inflated in relation to daily consumption. These findings are published today by WARC, the international marketing intelligence service, as part of its new WARC Data Premium suite, launched today.

     

    The analysis finds that as of the first quarter of 2021, social media now attracts more investment from advertisers than linear TV for the first time, however both media draw far more of advertising budgets than the average consumer spends with these channels each day.

     

    Social media, for example, is forecast to account for 39.1% of 2022 adspend among the eight media studied in the report – linear TV, online video, social media, print press, online press, podcasts, broadcast radio and online audio – but has a 21.4% share of daily media consumption, a discrepancy of 17.7 percentage points (pp) equivalent in value to $94.3bn.

     

    Social media has accounted for over two hours of daily media consumption since Q2 2016, per GWI monitoring, and WARC Data Premium’s latest forecasts expect daily social time to reach 2:30 during the second half of next year.

     

    Notably, all demographics measured in the report are set to spend twice as long with social media as they are with online press next year, despite ongoing trust issues – less than one-half of adults say advertising on social media is ‘somewhat’ or ‘very’ trustworthy, falling to 28% in China, 19% in the US and just 10% in the UK.

     

    Despite this, the largest gaps between social consumption and adspend can be found in China (where advertiser spend is 3.3x consumption), the UK (2.2x) and the US (2.0x). Conversely, in Australia (0.9x), India (0.4x) and Russia (0.5x), social’s share of daily media consumption is higher than its share of advertising budgets – a potential indicator of opportunity for brands.

     

    Linear TV adspend is 2x daily consumption, but online video investment is balanced Linear TV is forecast to account for a 31.5% share of advertising spend next year among the eight media studied, compared to a 16.1% share of daily media consumption. This would equate to an investment gap of $86.9bn worldwide next year.

     

    An overspend in relation to consumption does not translate directly into waste, and proportions vary by size of budget. Successful high-budget campaigns spending over $10m, for example, typically allocate 60% of their budgets to TV, while successful alcoholic drinks campaigns typically allocate 44%.

     

    While linear TV spend is inflated in relation to its consumption, online video is now close to parity after years of underinvestment. It is worth noting that the world’s largest online video platform – Netflix – is predominantly adfree, while platforms such as YouTube are prone to ad blocking on desktop and mobile devices.

     

    Still, advertisers are forecast to spend $71.9bn on online video this year, a 13.6% share of the eight studies media which compares to a 12.9% of media consumption, or one hour 37 minutes.

     

    Audio and online press heavily undervalued Data show that audio media appear highly undervalued – a trend that was recently highlighted by WARC in the US.

     

    Perhaps most notably, podcasts are found to be undervalued by $40bn, with the greatest opportunities for advertisers among audiences aged 16-24, middle earners, and those educated until the age of 16.

     

    One in three internet users now listens to a podcast each month, but a cost per thousand (CPM) of $23.55 is higher than even TV. Spotify has quickly gained ground on Apple to become the largest app for podcast streaming as of March this year.

     

    Online press also appears to be another heavy undervalued medium: advertisers would need to spend $58.0bn on online press ads globally next year to achieve parity with consumption levels. Instead, forecast spend is just $12.8bn.

     

    Business models in the publishing sector have been diversifying to counter the shortfall in advertising revenue; 76% of publishers are prioritising subscriptions this year.

     

    Said James McDonald, Managing Editor, WARC Data, and author of the report: “The study shines a light on divergences between media investment and consumption, two metrics which are rarely seen to be in lockstep with one another. In some cases, particularly for undervalued audio formats such as podcasts, this presents a good opportunity for canny practitioners to reach audiences with comparatively little competition.

     

    “For industry stalwarts like linear TV, the seemingly inflated investment gap actually speaks more to the enduring power of the medium – its vast reach combined with attentive audiences and the heightened impact of audiovisual creative. These traits allow it to command a premium in the media mix, one which is likely to sustain even as social media further grows its share of budgets.”

     

  • New from the insights major shows global advertising spend is on course for 12.6% growth this year to reach US$665bn

    WARC Adspend Trendwatch

     

    By Our Staff

     

    Global advertising spend is on course for 12.6% growth this year to reach US$665bn, an upgrade from 6.7% initially projected, as the global ad market rebounds strongly from the Covid-19 downturn of last year, finds WARC, the international intelligence service. Further growth, of 8.2%, is forecast for 2022, by when the global advertising market will be worth more than US$700bn.

     

    New quarterly research from 100 markets by WARC finds that advertising spend in Q2 2021 rose 23.6% to a total of US$157.6bn – a new high for a second quarter period and the strongest rise in over a decade.

     

    Growth in the second quarter was driven mostly by online formats, which collectively saw spend rise by 31.2% versus the previous year. eCommerce (+59.5%) and search (+50.6%) were star performers, though offline media – most notably linear TV (+11.5%) – also fared well.

     

    The second quarter rise in global ad trade followed on from 12.5% growth in the first quarter; consequently, at US$311.5bn, global ad investment was 17.8% higher during the first six months of the year than during the same period in 2020.

     

    New research lays bare the scale of the 2020 ad recession. While total spend fell by 5.4% – approximately half the rate initially estimated – spend on offline media such as print, radio, TV and cinema fell by a fifth, or US$63bn, equating to the worst downturn for this sector in WARC’s 40 years of market monitoring.

     

    Spend online, however, rose by 9.4% ($29.2bn) last year, buoyed by rising eCommerce (+27.4%), social media (+18.3%) and online video (+15.9%) investment.

     

    Online media gained 10 percentage points in budget allocation last year in the automotive and financial categories, a rate of increase that was double the pre-pandemic average. All product sectors are allocating more of their ad budget to online formats than before the pandemic.

     

    Online formats are also leading growth in 2021, with WARC forecasting spend on eCommerce advertising to rise 35.2% this year, mostly to the benefit of Amazon. Brand spend on search – where Google is the largest player – is set to rise by over a quarter (26.2%) this year, while online video spend is expected to be up by 17.7% and social media by 13.1% this year. All of these formats are expected to record growth in 2022, too.

     

    Said James McDonald, Managing Editor, WARC Data, and author of the report: “New quarterly research, collated from 100 markets worldwide, shows for the first time the true extent of the digital shift in response to the coronavirus outbreak last year. Growth in online adspend has typically tracked some 20 percentage points ahead of offline media, but in the final quarter of 2020 this leapt to a remarkable 41 points – an absolute difference of $41bn.Investment in offline media fell by $63bn worldwide in 2020, marking the worst year in living memory for the majority of media owners. All media are forecast to record growth this year, with most sustaining this into 2022. Yet, as has been seen before, it is the online platforms that are set to benefit most from the ad market’s recovery.”

     

    Trends by media and format 2021/2022

    :: Linear TV: Spend is projected to grow 7.1% – or $11.1bn – to $168.1bn this year, equal to a quarter (25.3%) of the global ad market. Investment is expected to rise by a further 2.7% in 2022, though this means only 60% of 2020’s losses will be recovered by 2022.

    :: Out of home: Double-digit growth is expected in both 2021 (17.4%) and 2022 (11.2%) as the medium recovers from the lowest level of investment in over a decade. This year will see $34.9bn being spent and this is set to rise to $38.8bn next year, though this still leaves the market $2.6bn short from 2019’s level of investment.

    :: Cinema: Spend was heavily curtailed in 2020 and a strong recovery looks underway. Cinema is forecast to be the fastest growing medium in both 2021 (149.9%) and 2022 (26.9%), taking total investment to $3.4bn next year.

    :: Linear radio: Investment in radio ads is projected to increase by double-digits (10.4%) – or $2.5bn – this year. However, spend in 2022 will largely be flat (0.8%) to a total of $26.6bn.

    :: Newspapers: Advertising spend on print newspapers will rise by 4.8% this year, the first growth recorded in a decade. This puts the total at $29.6bn, before a mild decline of 1.0% is projected for 2022.

    :: Magazines: Investment is expected to rise by a modest 2.5% this year before falling into decline of 4.3% next year. This means magazine brands in 2022 will have recovered just 5% of 2020’s lost advertising revenue.

    :: Social media: Social formats, combined, were among the strongest performers in 2020, recording total growth of 18.3% to a total of $99.2bn. Social spend is set to rise by 13.1% in 2021 and a further 10.1% in 2022, by when the market will be worth $123.5bn – approaching a fifth (17.2%) of all advertising spend worldwide.

    :: Online video: Online video spend rose 15.9% to reach $54.9bn in 2020. Growth is forecast to accelerate to 17.7% this year, with a rise of 15.9% predicted in 2022.

    :: eCommerce: Brand spend on eCommerce platforms leapt 27.4% last year as shoppers migrated online in response to social distancing guidelines. Advertising growth in this sector is now expected to accelerate to over a third (35.2%) in 2021, pushing the market’s value to a total of US$85.2bn. Further growth, of 11.4%, is forecast next year.

    :: Paid search: The search market recorded its first decline on record during the second quarter of 2020, though a strong finish to the year meant investment was up by 5.4% during 2020 as a whole. Rapid growth, of 26.2%, is forecast for 2021; the search market grew by a record 50.6% during Q2 2021 alone. Growth will then ease back to 4.3% in 2022, by when the market will be worth $151.9bn, 21.1% of all adspend.

     

    Trends by region 2021/2022

    :: North America: Spend in the largest region (with a 38% share of all investment) is expected to rise by 12.8% this year to reach $254.9bn, driven by a 12.7% increase to $242.5bn in the US and a 14.5% rise to $12.3bn in Canada. North America will see spend rise 8.4% next year to reach a new high of $276.3bn.

    :: Asia Pacific: Regional advertising investment is projected to increase by 12.8% this year to top $200bn for the first time. This will be driven by the Chinese ad market, which is expected to grow by 16.3% to top $100bn for the first time. Japan (+8.9% to $44.4bn) and Australia (+11.6% to $12.2bn) are also set for full recoveries this year. India, however, will see strong growth (+16.1% to $8.2bn) but 2021 investment will not fully recover 2020’s losses.

    :: Europe: Spend in Europe is expected to rise by 12.1% this year to reach $154.6bn, with 6.5% growth projected for 2022. Spain (+16.6% to $7.6bn) and the UK (+15.5% to $33.3bn) will be the quickest growing major markets this year. Russia (+14.4% to $9.3bn), Italy (+11.9% to $9.9bn), France (+11.4% to $15.7bn) and Germany (+9.7% to $26.6bn) will also see strong growth, though Spain and Russia will not recover all of 2020’s losses this year.

    :: Latin America: Ad investment is projected to rise by double-digits in both 2021 (16.9%) and 2022 (11.1%) to reach $24.8bn next year. However, this is still down 7.8% from 2019 levels owing to a steep contraction in 2020, particularly in the region’s largest market – Brazilian adspend (in US dollar terms) fell by more than a third in 2020, with 22.3% growth projected for this year and a 12.4% rise expected in 2022 (to reach $13.2bn).

    :: Middle East: Following a one-quarter decline in spend last year, regional advertising growth will be 6.2% this year and will then accelerate to 15.1% in 2022. This puts total investment at $13.2bn next year, $1.2bn less than the pre-pandemic level in 2019.

    :: Africa: Spend is projected to rise by 9.7% this year to reach $6.2bn, with further growth of 7.3% expected for 2022.

     

    Trends by product category (Five largest in 2022)

    :: Telecoms & utilities: The quickest growing category pre-pandemic shows no sign of slowing as advertising spend is expected to grow almost twice as quick as the wider ad market in 2021 and 2022. Total investment will increase by 21.1% this year and then 11.2% next year to reach a projected $95bn, extending telecoms & utilities’ lead as the largest advertising category.

    :: Media & publishing: Advertising spend from media brands is expected to top $70bn worldwide this year for the first time, growing 18.3% (the third quickest rate) and easily surpassing the mild decline last year. Further growth of 6.9% is expected in 2022, with online media expected to take an almost three-quarters share of total investment, up from one-quarter in 2013.

    :: Business & industrial: Investment from business advertisers is forecast to rise by double-digits (10.6%) this year to equal $69.3bn. Growth of 7.7% is expected in 2022, the third quickest rate that year, which will take total adspend to $74.6bn and within touching distance of overtaking media & publishing as the second largest category.

    :: Retail: A cut to advertising budgets of $6.2bn last year will only just be recovered this year – investment is projected to rise by 11.1% to reach $66.2 in 2021, just 0.6% higher than pre-pandemic spend in 2019. WARC Data’s analysis of company reports also finds that while some retailers were modest in their ad cuts last year, like Amazon (-0.9%) and Best Buy (-2.5%), others were more severe – Walmart (-13.5%), Carrefour (-22.8%) and TJX (-34.5%) cut their adspend by double-digits in 2020.

    :: Financial services: Steep cuts to automotive advertising last year has pushed financial services into the top five largest categories. Total investment is projected to rise by 17.9% in 2021 and this will push spend above $50bn for the first time. Additional growth of 7.0% is expected next year, furthering its lead over sixth placed automotive.

     

    A sample report of WARC’s Global Ad Trends: Ad Investment 2021/22 is available for all here. WARC Data subscribers can read the report in full.

     

    Global Ad Trends, a bi-monthly report which draws on WARC’s dataset of advertising and media intelligence to take a holistic view on current industry developments, is part of WARC Data, a dedicated independent and objective one-stop online subscription service which rigorously harmonises, aggregates, verifies and evaluates data from over 100 reputable sources.

     

  • Strong rebound from pandemic losses forecast for UK ad market

    UK adspend will grow by 15.2%: Advertising Association/WARC Expenditure Report

    By Our Staff

     

    The latest Advertising Association/WARC Expenditure Report, the only source to collect advertising revenue data across the entire media landscape, forecasts UK adspend will grow by 15.2% this year to reach a total of £27.0bn. This will recover the entirety of 2020’s £1.8bn decline and is expected to precede a 7.2% rise in 2022, by when the market will be worth a record £29.0bn. A 15.2% rise this year will offset a decline of 7.2% in 2020, while further growth is projected into 2022

     

    Ancillary forecasts suggest the UK is on course to achieve the strongest ad trade recovery of any major global market this year, and this puts the UK economy in a position to bounce back strongly post-pandemic, as every pound invested in advertising generates six in GDP.

     

    Adspend growth forecast for all media in 2021:

    Particularly strong results are expected for the media most adversely affected by the pandemic, namely cinema at +266.8%, digital out of home at +52.3%, and traditional out of home at +14.5%. Online classified investment is set to rise by a fifth (20.4%), supported by increased recruitment activity arising from brighter economic prospects this year.

    Other media are not expected to recoup 2020’s losses until next year, however. This is true of TV (up 8.8% in 2021), direct mail (up 6.4%) and publishing disciplines encompassing national news (up 7.3%), regional news (up 3.9%) and magazine brands (up 6.8%).

    Online display – inclusive of social media and online video – is set to see growth accelerate this year (+13.4%), as is the case for paid search (+18.4%). Taken together, these two sectors are expected to account for two-thirds (66.4%) of all UK advertising spend this year, up ten percentage points from a share of 56.2% in 2019.

     

    The full picture in 2020:

    The latest dataset includes final figures for Q4/FY 2020, which show spend on advertising declined by 7.2% to a total of £23.5bn last year. The decline in 2020 was softer than that following the Great Recession at the total market level, but most media owners recorded significant reductions in spend. In a positive end to last year, spend rose 2.6% during the final three months, resulting in the highest quarterly total on record (£7.0bn).

    The key findings for 2020 show a strong shift by advertisers into online video, social media and search markets, in a move part-reflective of the rapid acceleration of e-commerce, as lockdowns forced consumers to purchase goods and services from home. Spend on paid search went up 7.1%, online display rose by 10.4%, and TV VOD was up 15.7%. There was a small increase (0.5%) for online newsbrands, though other media saw sharp declines.

    The UK’s advertising industry was well-positioned for the challenges of the lockdown, as it already had one of the most developed digital ad markets in the world. The UK’s average weekly value of e-commerce spend rose 47.1% in 2020, to £2.1bn, which equated to 27.9% of all retail sales latest year – ahead of key international markets. For the first time, the UK was the country with the largest e-commerce share as a percentage of total retail spend. China’s equivalent figure was 24.9%, the EU was 20.0%, and the US was 14.0%.

    Among individual product categories, Government adspend grew 37.2% during 2020 as public health messaging was deployed in the effort to combat COVID-19. As normality returns, this spend is expected to fall back in 2021, with growth instead expected across the other main consumer categories, notably services (up 22.0%), industrial (up 19.8%) and financial (up 20.2%).

     

    Said Stephen Woodford, Chief Executive, Advertising Association: “Advertising investment has mirrored the rapid changes seen across the economy over the last year, primarily the acceleration provided by lockdowns towards e-commerce across all sectors able to sell online. The pandemic accelerated trends that were already changing the market, evident for several years. The UK’s sophisticated online advertising marketplace helped to keep the economy moving and, no doubt, supported businesses, large and small, to stay connected with consumers who were no longer on the high street. SMEs that had little or no online presence quickly adapted to serve their customers via online platforms and more sophisticated online businesses increased their investment behind these. Across the economy that advertising serves we saw remarkable innovation and agility, which helped to lessen the economic impact as firms adapted to keep serving their customers, despite the disruption. The predicted growth this year of 15.2% is good news, with every £1 of advertising spend generating £6 of GDP, this will be a welcome boost for jobs and growth in the wider economy.”

     

    Added James McDonald, Head of Data Content, WARC: “The data from 2020 were unlike any we have seen in our 40 years of market monitoring. Save for a flock of online pure-players, the majority of media owners surveyed by WARC experienced their worst trading climate in living memory. This was true at both the financial and the human level – many will not witness a full recovery until 2022 at the earliest. Agile formats with short lead times were seen to flourish last year, particularly within social media and e-commerce environments, the latter benefitting greatly from stay-at-home orders and well-established logistical networks. Media owners in these spaces are expected to build on good 2020 results this year, though the situation will be more challenging across the remainder of the landscape as ad investment continues to favour performance marketing.”

     

    Media
    2019
    £m
    2020
    £m
    2020
    year-on-year
    % change
    2021 forecast year-on-year
    % change
    2022 forecast year-on-year
    % change
    Search
    7,814.9
    8,369.0
    7.1%
    18.4%
    10.8%
    Online display*
    6,404.5
    7,070.8
    10.4%
    13.4%
    7.9%
    TV
    4,930.0
    4,350.0
    -11.8%
    8.8%
    2.1%
    of which VOD
    451.7
    522.7
    15.7%
    14.3%
    13.9%
    Online classified*
    1,399.0
    975.6
    -30.3%
    20.4%
    2.2%
    Direct mail
    1,383.0
    909.0
    -34.3%
    6.4%
    -7.3%
    Out of home
    1,300.8
    699.1
    -46.3%
    36.9%
    19.2%
        of which digital
    694.0
    414.9
    -40.2%
    52.3%
    24.6%
    National newsbrands
    996.2
    755.0
    -24.2%
    7.3%
    0.5%
    of which online
    317.1
    318.8
    0.5%
    10.9%
    7.7%
    Regional newsbrands
    719.5
    470.1
    -34.7%
    3.9%
    -1.0%
    of which online
    238.8
    183.3
    -23.3%
    7.3%
    5.5%
    Magazine brands
    654.5
    461.9
    -29.4%
    6.8%
    0.1%
    of which online
    264.1
    199.4
    -24.5%
    15.8%
    4.6%
    Radio
    702.7
    613.9
    -12.6%
    12.9%
    2.4%
    of which online
    49.3
    46.8
    -5.0%
    14.0%
    5.6%
    Cinema
    299.1
    54.7
    -81.7%
    266.8%
    61.1%
    TOTAL UK ADSPEND
    25,283.1
    23,458.1
    -7.2%
    15.2%
    7.2%
    Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio is display advertising on broadcasters’ websites.
    Source: AA/WARC Expenditure Report, April 2021

     

  • The 'duopoly' of Alphabet and FB will take 35 cents in every ad dollar, notes the report

    Online ads to account for over half of $660bn adspend in 2020: WARC

     

    By A Correspondent

     

    Global advertising spend is set to rise by 7.1 per cent to $660 bn this year, buoyed by 13.2 per cent growth in internet investment. But traditional media, combined, are expected to record 1.5 per cent growth to $324.2bn – the first rise since 2011 – finds WARC, the international marketing intelligence service.

     

    The traditional media total is expected to be boosted by a return to growth for TV; here spend is set to rise 2.5  per cent to $192.6bn, helped in no small part by the US presidential election campaigns and the Summer Olympic Games in Tokyo. But advertising revenue for the duopoly (Alphabet and Facebook) is forecast to reach $231.9bn in 2020, having topped the TV total for the first time in 2019.

     

    Alphabet’s ad income is forecast to rise 10.5 per cent to $149.0bn worldwide, equivalent to 23 cents in every ad dollar. A full 72.4 per cent – $107.8bn – will come from Alphabet’s core Google search platform – this gives Google a 77.0 per cent share of the global search market. YouTube is expected to earn a further $18.5bn for Alphabet in 2020, a 22.1 per cent rise from 2019 and equivalent to 29.0 per cent of all online video adspend worldwide.

     

    Facebook’s ad revenue is projected to rise 19.0 per cent to $82.9bn; much of this growth is organic though the social network will benefit from the US presidential campaigns this year. Amazon’s ad income is set to rise 21.4 per cent to $17.1bn, Twitter’s 9.2 per cent to $3.3bn and Snap’s 34.1 per cent to $2.3bn. All will contribute to an overall rise of 13.2 per cent in internet ad investment this year, to a total of $335.4bn – over half (50.9 per cent) of the global total for the first time.

     

    Said James McDonald, Managing Editor, WARC Data, and author of the research: “Internet ad growth has been far stronger than the state of the global economy would suggest, rising seven times faster on average since 2015. But, regulation aside, online platforms are bound by the law of large numbers, and revenue growth is easing for key players like Alphabet and Facebook. We are yet to amend our forecasts in light of the COVID-19 situation, as we would expect – if the crisis is contained – displaced spend to be reallocated later in the year. Advertising’s relationship with GDP is strong, but a slowdown in economic output as a result of the virus will not necessarily translate into reduced advertising investment. If events such as the Tokyo Olympics and UEFA Euro 2020 tournament are postponed or cancelled, however, we would expect a notable impact.”

     

    All product categories are expected to see growth in 2020

    Adspend is set to rise across all of the 19 product categories monitored by WARC. The financial services sector is expected to lead growth, with a forecast rise 11.8% to $53.4bn in 2020. A full 53.9% of spend is directed towards online formats; banks in particular are looking to build brand resonance with youth demographics (increasingly via social media).

    At the other end of the scale, a rise of 2.6% in the retail sector is soft compared to the global rate of 7.1% but would still represent the strongest growth since 2013, lifting market value to $65bn.

    Consumer packaged goods (CPG) sectors such as soft drinks (+6.5% to $17.3bn) and food (+4.9% to $28.1bn) are expected to grow just behind the global rate this year, alcoholic drinks (+6.9% to $9.7bn) and automotive (6.8% to $57.2bn) are roughly par.

     

    Trends by platform

    • Alphabet: Alphabet’s advertising revenue – across Google Search, YouTube, and Google Network Members (third parties that host Google ads) – is forecast to rise 10.5% to $149.0bn this year – 22.6% of global advertising spend (up from 21.9% in 2019). This is before the deduction of traffic acquisition costs (TAC), which amounted to $30.1bn in 2019.

    • YouTube: Advertisers are forecast to spend $18.5bn on YouTube this year, a rise of 22.1% from $15.2bn in 2019. This gives YouTube a 29.0% share of all online video advertising spend, and a 2.8% share of total adspend.

    • Google: By far the largest service in Alphabet’s portfolio, Google’s ad income is expected to rise 9.9% to $107.8bn this year – 77.0% of global search spend and 16.3% of all adspend.

    • Facebook: Advertisers are expected to spend $82.9bn across Facebook, Messenger, WhatsApp and Instagram this year, a rise of 19.0% from 2019. This gives Facebook a 12.6% share of global advertising investment.

    • Amazon: Amazon is forecast to record double-digit ad revenue growth again this year, with income amounting to $17.1bn, a 21.4% rise from 2019. This gives Amazon a 2.6% share of global advertising spend.

    • Snapchat: Ad investment in Snapchat is forecast to rise 34.1% to $2.3bn in 2020, 2.2% of all social and messaging spend and just 0.3% of total adspend.

    • Twitter: Twitter’s ad income is expected to ease into single digits, with a total of $3.3bn representative of a 9.2% rise in 2020.

     

    Trends by media and format

    • TV: Spend is forecast to rise 2.5% to $192.6bn, 29.2% of all global spend this year. This only partially reverses a 4.4% dip in 2019. A third of the global TV total is transacted in the US – where, TV spend is set to rise 4.0% to $62.9bn. Just over $4bn will come from presidential campaigns.

    • Out of home: Spend across billboards, transport and retail/point of sale (PoS) locations is forecast to rise 5.9% to $43.5bn this year, the sixth consecutive year of growth. The sector is benefitting from the increasing penetration of digital sites in advanced markets.

    • Radio: Advertiser investment in radio is forecast to rise 1.8% to $32.8bn, recouping losses from a 1.3% dip in 2019.

    • Print: Spend is set to fall by $3.2bn, or 5.8% in 2020, but this is half the rate of decline recorded in 2019. Digital revenue now accounts for over a third of total ad income for publishers worldwide, though this share is closer to a half at the New York Times.

    • Social media: Spend is forecast rise 19.5% to $102.4bn this year, 15.5% of global advertising spend. Facebook (including Messenger, Instagram and WhatsApp) is expected to draw 80.9% of this investment, or $82.9bn, though this share is down from 81.2% in 2019. Just over 42% – $35bn – of Facebook’s ad revenue will come from the US this year.

    • Online video: Spend is forecast to rise 21.4% to $63.7bn this year, equivalent to 9.7% of global advertising spend. YouTube is expected to account for three in ten cents.

    • Search: Spend is forecast to rise 12.7% to $140.1bn in 2020, 21.2% of global adspend. Google is set to draw 77.0% of the market, down from 79.0% in 2019.

     

    Trends by region

    • North America: Total market growth forecast at 8.4% this year – to $250.3bn – following a 4.5% rise in 2019. The US ad market is expected to grow 8.8% to $238.2bn, while Canada is projected to grow 1.9% to $12.2bn

    • Asia-Pacific: Advertising spend is expected to rise 7.5% to $205.0bn in 2020, with China (+9.7% to $98.5bn), Japan (+3.2% to $40.2bn), Australia (+2.4% to $13.3%) and India (+15.6% to $11.2bn) all set to record annual growth.

    • Europe: European adspend is forecast to rise 6.9% to $158.7bn this year, with France leading key market growth at +10.0% (to $18.2bn). The UK (+3.2% to $31.3bn), Germany (+1.3% to $24.9bn), Italy (+2.7% to $10.5bn) and Russia (7.6% to $10.5bn) will continue to see rising investment.

    • Latin America: The region is heavily susceptible to the strength of the US dollar, which resulted in an 1.1% decline in adspend last year. A further fall, of 2.5%, is forecast this year, with Brazil recording a 4.3% dip to $14.3bn.

    • Middle East: Spend is expected to fall 1.7% to $12.0bn in 2020, following on from a 3.7% fall in 2019.

    • Africa: Spend is expected to rise 5.6% to $6.9bn this year, reversing a 1.5% dip in 2019.

     

    Other new key media intelligence on WARC Data across regions

     

    Global:

    • Consumers: Ad blocking rises to all-time high of 764m people

    • Brands & Advertisers: Food, drink and automotive brands see lowest email CTR

    • Media & Tech:E-sports investment to reach $800m this year

     

    Americas:

    • Consumers:One-quarter of Americans now own a smart speaker

    • Consumers:Netflix subscriptions in Latin America top 30 million

    • Media & Tech: NFL, NBA and MLB to draw $4bn from sponsors in 2020

     

    Asia Pacific

    • Brands & Advertisers: Southeast Asian brands most active on WhatsApp

    • Media & Tech: OTT to halve APAC pay TV growth by 2024

    • Media & Tech: Sponsorship investment for Tokyo Olympics to triple

     

    Europe, Middle East and Africa

    • Consumers: 26% of 18-24 year olds use TikTok in the UK

    • Brands & Advertisers: Less than half of marketers use consumer data systematically

    • Consumers:Connected TV use in Portugal flatlines for second year

    A sample of The Adspend Outlook 2020 report can be downloaded here.

     

     

     

  • Google and Amazon are battling for smart speaker control as growth in paid search cools, but voice search remains a niche marketing pursuit

    WARC’s global trend sheds focus on search advertising

    By A Correspondent

     

    WARC has found that investment in search advertising will rise 9.6 per cent this year, to $135.9bn – equal to 22.0 per cent of all advertising spend worldwide. But this growth rate is the softest since 2015 and is a marked slowdown from the 16.9 per cent rise in 2018. Search’s share of internet advertising has now flatlined at 45.8 per cent – the lowest in more than a decade.

     

    The squeeze on Google’s main source of revenue has forced it to confront Amazon head on in the smart speaker market, as it looks to facilitate voice search in future paths to purchase. But Amazon has a first-mover advantage in many markets, notably the US, UK and Japan. Control of voice search could be critical to either’s success in future; most marketers understand its potential in the coming years but few have plans to use voice search today.

     

    Mobile is driving growth in the search market

    Mobile search adspend is expected to rise 19.2per cent to $88.1bn this year – almost two-thirds (64.8per cent) of total search spend worldwide. The US alone accounts for 43.0per cent of this total (US$38.1bn in 2019), while a fifth (21.8per cent, or $19.3bn) is transacted in China. Japan ($6.1bn, a 6.9per cent share) and the UK ($5.3bn, 6.0per cent) follow.

    Google accounts for 95.4per cent of all mobile searches worldwide, higher than its share of desktop search traffic (88.6per cent). Google’s share of mobile search traffic in the US (94.4per cent) and UK (97.9per cent) is close to its global rate but in China its share is near zero, with Baidu the incumbent on 79.9per cent.

    Mobile’s share of search advertising investment is rising ahead of mobile’s share of search traffic, which has plateaued globally since 2017 as consumers spend more time in app (over 80per cent of mobile usage is in-app, according to comScore).

    Research by Mindshare shows that Instagram is used by 69per cent of consumers to discover products, ahead of Snap at 64per cent and Facebook at 61per cent. Google is used most to research, with 70per cent of consumers utilising the platform in this way (versus 51per cent for second-highest Pinterest). Crucially, however, Amazon is used most to buy; 78per cent of Amazon users report this, compared to 40per cent using Google for the same purpose.

    One in three (32per cent) online purchases in the UK begins on Amazon, rising to 52per cent for entertainment products, 50per cent for children’s products, 47per cent for household items and 40per cent for electronics. Comparatively, one in five (19per cent) online purchases begins with a search engine, such as Google.

    Amazon made $35bn from e-commerce in Q3 2019, up by a fifth from the previous year and putting it on course to reach close to $150bn in sales for 2019 as a whole. Over one in ten (11per cent) product page views come from sponsored ads, according to data from Jumpshot.

     

    Voice is becoming a new search battleground

    Voice is an area of growth for search advertising, aided by the rising popularity of smart speakers – an area where competition between Google and Amazon is fierce. More than one in ten internet users in the US and UK now own a smart speaker. Amazon enjoys a healthy lead over Google in a number of key markets, including the US, where three-quarters of smart speaker owners use Alexa. In the UK, that share is 77per cent.

    The ‘first-mover’ advantage is crucial here, however. Google was first to launch in Australia and enjoys a comfortable lead over Amazon (86per cent penetration versus Amazon’s 15per cent), and the same is true in Singapore (76per cent versus 24per cent). This may not bode well for Facebook, which is developing an AI assistant for its Portal devices and is playing catch up to win market share in this area.

    For all the potential, voice search remains a niche pursuit for advertisers today: only one in ten US practitioners plans to include it within their marketing strategy for 2020. A quarter (25.2per cent) believe it will be an ‘extremely’ important marketing channel within the next three to five years, but half (48.9per cent) have no plans to utilise the tech in the short-term.

    Said James McDonald, Managing Editor, WARC Data, and author of the research: “Search has boomed over the last decade as practitioners have put a greater emphasis on performance-related advertising to lift ROI – few marketing strategies exclude a search element today. WARC research shows that practitioners regard it as the easiest channel to measure accurately, and it is more cost effective in driving conversions when compared to online display formats such as video. But the industry is beginning to question whether this focus has been beneficial in the long run, with a number of large, consumer-facing businesses considering a pivot back to more conventional brand building formats. This could explain, in part, the slowdown in search investment this year, a cooling which will reignite Google’s drive to control the next frontier: voice-assisted search.”

     

     

  • TV though rules in the soft drink and food categories, notes the study

    Globally, most products are moving adspends online: WARC report

     

    By A Correspondent

     

    TV still attracts over two-thirds of advertising investment within the soft drinks sector, while a similar share is seen in the food category – both sectors are far less likely to have been disrupted by e-commerce, so the need for high levels of digital adspend to facilitate a path to purchase is reduced.

    But across all categories, ad investment is shifting heavily into internet formats. The pivot to online advertising is particularly stark within financial services and retail, with both sectors having heavily developed digital platforms to serve their customers in recent years.

    These are some of the findings by WARC, the global authority on advertising and media effectiveness, drawn from an analysis of its newly relaunched WARC Data product, which provides a new industry standard measure of net advertising investment data across 19 product categories in 23 markets, including the United States, United Kingdom and China.

     

    Said James McDonald, Managing Editor, WARC Data, and author of the research: “In a multichannel world, it has become harder than ever to track campaign performance, measure ROI, or to even trust third-party data. Additionally, the problem is compounded by an environment of ad blocking, fraud, and consumer distrust, and is hazed by walled gardens, programmatic stacks and opaque practice. This results in millions of ad dollars wasted each year. But it is essential that ad investment works harder in the media mix to obtain optimal reach and effectiveness. As such, our latest research into product category insights provides vital data to help brand owners, agencies and media strategists and planners inform their decision making.”

    In WARC’s latest ‘Global Advertising Trends – Benchmarking ad investment by product category’, the industry intelligence included in the report sheds light on how different sectors value advertising media, and how this has changed over time.

    Key findings for five of the 19 product categories available include: 

    Financial Services

    :: Total global adspend in 2018: $43.2bn (+13.0% year-on-year)

    :: Median revenue ROI for successful campaigns: 2.93

    :: Media spend: Internet $19.7bn (+24.4% year-on-year). TV $12.9bn (+4.0%).

    :: Radio $3.7bn (+5.1%). Other $7.0bn (+6.7%)

    :: Ad/sales ratios: Financial services (3.6%). Banks, credit, loans (6.7%). Insurance (0.8%). Investment (1.5%).

     

    Close to half of the $43.2bn financial services brands invested in advertising last year was directed towards internet formats. The data show a dramatic shift to digital over the last five years; internet’s share of sector spend has grown 22.0 percentage points (pp) since 2013, to 45.5% last year. This is just above internet’s share of global adspend (44.1%). As a share of sales revenue, the sector spends 3.6% on advertising, rising to 6.7% among banks.

     

    Food

    :: Total global adspend in 2018: $25.3bn (+1.4% year-on-year)

    :: Median revenue ROI for successful campaigns: 2.93

    :: Media spend: TV $16.5bn (+1.0% year-on-year). Internet $3.7bn (+7.9%). Print $2.8bn (-12.7%). Other $2.3bn (+15.3%)

    :: Ad/sales ratios: Food (2.6%). Confectionery (5.6%). Dairy (0.6%). Meat, fish, poultry (0.7%).

     

    Almost two-thirds of the $25.3bn in ad investment within the food category last year was spent on TV, nearly double TV’s global share of 33.3%. TV spend in the sector rose 1.0% year-on-year to $16.5bn in 2018 but has dipped by 3.7% each year since 2013 on a compound basis. Print also accounts for a greater share of food adspend than is the case globally, with newspapers’ (-2.6pp) and magazines’ (-2.1pp) share dipping mildly over the last five years.

     

    Retail

    :: Total global adspend in 2018: $62.3bn (+0.0% year-on-year)

    :: Median revenue ROI for successful campaigns: 4.40

    :: Media spend: Internet $21.5bn (+9.1% year-on-year). TV $20.3bn (-0.6%). Print $9.6bn (-15.5%). Other $10.9bn (+0.8%)

    :: Ad/sales ratios: Retail 2.3%. Clothing & fashion (2.9%). Restaurants (2.0%). Supermarkets (1.2%).

     

    Global advertising spend in the retail sector was flat in 2018 at $62.3bn. The $1.8bn in extra internet spend (up 9.1% from 2017) was offset by a decline in spend for all other media bar out of home (+12.7%) and cinema (+4.9%). Ad investment among the retail sector has tracked downwards in recent years, recording a compound annual growth rate of -1.8% since 2013. However, online advertising has become far more valuable to the sector during this time.

     

    Soft drinks

    :: Total global adspend in 2018: $15.1bn (+1.1% year-on-year)

    :: Median revenue ROI for successful campaigns: 2.84

    :: Media spend: TV $10.5bn (+1.1% year-on-year). Internet $1.9bn (+28.3%). OOH $1.3bn (-24.1%). Other $1.4bn (+1.3%)

    :: Ad/sales ratios: Soft drinks (5.9%). Bottled water (5.9%). Carbonated (5.9%).

     

    At 70.0%, TV’s share of soft drinks brands’ adspend is higher than all other categories studied for the report. The $10.5bn spent on TV ads in 2018 was up 1.1% from 2017

    and has grown at a compound rate of 2.0% each year since 2013 – bucking the global trend. However, investment in other media – chiefly internet – has eroded TV’s share of sector spend by 4.4pp over the five years to 2018. Internet formats still draw a relatively small amount of investment, at 12.8%; this is almost three times less than the global level and is likely a reflection of how little e-commerce has disrupted the sector.

     

    Toiletries & cosmetics

    :: Total global adspend in 2018: $25.7bn (-3.6% year-on-year)

    :: Median revenue ROI for successful campaigns: 2.06

    :: Media spend: TV $14.9bn (-3.9% year-on-year). Internet $5.6bn (+9.7%). Print $2.9bn (-12.0%). Other $2.3bn (-15.9%)

    :: Ad/sales ratios: Toiletries & costmetics (16.9%). Bath toiletries & soaps (12.3%). Fragrances (21.5%).

     

    At a top line level, ad investment within the toiletries & cosmetics sector has dipped 4.1% each year since 2013 on a compound basis, to a total of $25.7bn last year. This is largely due to how this spend has been allocated historically: in 2013, TV accounted for two-thirds of adspend while print drew a further fifth. Both of these media have recorded declining spend over the period, with internet (+10.7pp) and out of home (+4.7pp) gaining most in share but from a low base -depressing total investment growth in recent years. Print still accounts for 11.4% of sector spend, with magazines alone worth over $2bn, but this total has more than halved since 2013.

     

  • In Europe, advertisers spend 1.6 times more on cinema per admission than in the US

    Cinema advertising making a strong headway globally, notes WARC report

    By A Correspondent

     

    The global cinema advertising market is expected to be worth $4.6bn this year, representing a 6.8 per cent rise from 2018. This is ahead of the all-media growth forecast by WARC, of 4.6 per cent for 2019 (to $624.9bn), and places cinema as the second-fastest growing ad medium this year, behind internet as a whole.

     

    While small, cinema’s 0.7 per cent share of global adspend is expected to hold steady in 2019, making it the only medium other than Internet not to lose share. Figures from WARC’s Adspend Database show that cinema’s share of global adspend has dipped only twice since 1980 (1994 and 2013) and growth in cinema ad investment has generally tracked ahead of other traditional media since 1981, and consistently so since 2014.

     

    In Europe, advertisers spend 1.6 times more on cinema per admission than in the US. The UK leads the way, with spend per admission rising from £0.18 in 1980 to £1.43 last year, when 177m admissions were recorded – the highest on record. This despite 46% of UK consumers stating that Netflix is their first choice for watching movies, according to GlobalWebIndex.

     

    The report notes that China is the largest cinema ad market globally, with RMB11.9bn (US$1.8bn) expected to be spent this year. This equates to a 47.3 per cent share of global cinema adspend when measured in Purchasing Power Parity terms. Further, China has accounted for three quarters (74.9 per cent) of global growth in Cinema adspend since 2015, on average, and is expected to contribute 87.4 per cent towards global cinema growth this year.

     

    In the US, the world’s second-largest cinema market with a projected value of $735m this year, the medium draws less than half a percent of media budgets on average. Seven product categories allocate more than this, most notably food, for which cinema accounts for 1.5 per cent of all media spend.

     

    Captive audiences viewing high-quality ads in an emotional atmosphere is a draw for advertisers. Research by Ebiquity has found that Cinema outperforms all other media at triggering an emotional response, guaranteeing a safe environment, and getting ads noticed. However, the medium scores lowest in increasing campaign ROI, maximising campaign reach, and generating short-term sales.

     

    Further, data from the Motion Picture Association of America (MPAA) show that the amount consumers spend on digital home entertainment, including on online subscriptions such as Netflix, surpassed the amount spent at the cinema globally for the first-time last year ($42.6bn versus $41.1bn). This landmark had already been reached in the US during 2015.

     

    Over the course of an average year, a Netflix subscription will cost a consumer US$113.16. This compares to the $45.55 a North American will spend at the cinema each year on average, with the equivalent figures for the UK and the EU at $25.13 and $11.04 respectively.

     

    In the US, a moviegoer visited the cinema five times on average in 2018, which roughly equates to 263m consumers going every two months. But with almost three-quarters (74 per cent) of Americans now using an online subscription – and 84 per cent using a pay TV channel – to watch a movie at least 2-3 times each month, viewership in the living room may have reached parity with the silver screen.

     

    Said James McDonald, Managing Editor, WARC Data, and author of the research: “The experiential nature of cinema places it in a different bracket to SVOD services, which instead occupy a similar space to traditional TV. This, coupled with the exclusivity of box office hits – particularly franchises – should ensure any downward pressure from SVOD services is minimal in the short-term.

     

    “Cinema offers advertisers access to younger, more affluent audiences who have an affinity with the medium. This enables ads to be screened in a brand safe environment where they will be noticed, often in a location that is close to a retail outlet and, by extension, a point of purchase.”

     

     

  • Facebook looks to new revenue streams as ad market begins to cool

    Social advertising growth slows down, notes WARC report

    By A Correspondent

     

    Marketing services research firm WARC has found that advertising revenues among key social and messaging companies rose 26.2 per cent year-on-year during the first three months of 2019 to reach $17.9bn – the second-highest total on record.

     

    However, while this growth outpaced all other advertising sectors, it was roughly half the rate of expansion seen just one year earlier (51.6 per cent in Q1 2018). All six companies studied in the report – Facebook, Pinterest, Snap, Twitter, Tencent (WeChat/QQ), Weibo – recorded an easing in ad revenue growth during Q1 2019.

     

    In North America, the largest market for social advertising ($8.0bn in Q1 2019), user growth has stalled over the last 12 months. Time using social platforms has also stagnated in the region, remaining at two hours per day for the last three years. Facebook has 186m daily users in North America, Snap 80m, and Twitter 28m – numbers that are mostly flat or down from the previous year.

     

    Further, European user growth across Facebook’s social properties (including WhatsApp and Instagram) slowed to its lowest rate on record (1.4 per cent), while Snap’s users in the region fell for the first time. Daily social media usage fell by four minutes to 1:49 (hours:minutes) across Europe year-on-year, according to GlobalWebIndex.

     

    Instead, growth is emanating from Asia, in particular from India, Indonesia and the Philippines. Daily social time is also ticking up in the region, reaching 2:11 compared to 2:09 a year earlier. But users here monetise at a far lower rate than their Western counterparts.

     

    The slowdown in social ad growth comes at the same time as the tech sector in general, and Facebook in particular, is under pressure over its use of consumer data. Recent research by YouGov, Dentsu and Universal McCann, among others, finds that half of consumers believe tech and social media companies have too much power and influence, while a similar proportion feel more industry regulation is required.

     

    As advertising revenue growth cools, social media companies are increasingly looking to diversify. Facebook has already announced its intention to launch a new cryptocurrency, ‘Libra’, by 2020, with emerging markets being its prime focus, alongside ‘Calibra’, a digital wallet which will be integrated into Messenger and WhatsApp.

     

    While social shopping is still nascent on Western platforms, in China, the ease of mobile payment has made social shopping a norm. Tencent made RMB21.8bn ($3.2bn) from FinTech in the first three months of this year. But in the US, security and privacy are cited as major concerns for the development of social commerce, and this is a core challenge Facebook will need to confront.

     

    Summing up, James McDonald, Managing Editor, WARC Data, and author of the research, said: “The social sector is still expanding at a rapid pace – amassing $17.9bn of ad money in the first three months of this year alone – but growth has eased over recent quarters and has halved from a year ago. Further, user growth has stalled in North America and consumer trust in social platforms is waning.

     

    “Facebook is looking to diversify its revenue streams with the launch of Libra which, the company says, will not be used directly to enrich the consumer data it has harvested for ad selling purposes. However, the cost of advertising on Facebook’s social platforms could feasibly rise if the company proves a relationship between the ads it serves and an increase in Libra-facilitated sales.”

     

     

  • For the first time, the strength of the duopoly is reducing the pool of ad money available to other online media owners, notes a WARC study

    Google and Facebook to make $176bn from advertising, pushing share of internet marketing to over 60%: WARC

    By A Correspondent

     

    WARC, the international marketing intelligence service, has found that of the $590.4bn spent on advertising worldwide last year, $144.6bn (24.5%) went to the Google and Facebook ‘duopoly’, which equates to almost one in four dollars. The duopoly’s adspend share is up from 20.3% in 2017 and is more than double the 10.8% recorded in 2014. WARC predicts a further increase to 28.6% ($176.4bn) this year.

     

    Looking only at the internet advertising market, the duopoly took over half (56.4%) of ad money in 2018, a share which WARC expects to rise to 61.4% this year. This growth, notes the report, is squeezing other online media owners, as the pool of ad money available to them is now in decline for the first time, down 0.7% to $111.0bn.

     

    Said James McDonald, Data Editor, WARC, and author of the research: “One of the main reasons for the duopoly’s success is their creation, and subsequent ownership, of the digital formats perceived to be most effective by adland’s decision makers: paid search and social. Several surveys in the past year have shown search and social to be highly regarded by advertisers in terms of meeting campaign objectives. Google dominates the search engine market, handling almost all mobile searches worldwide and nine in ten on desktops. Meanwhile, ad buyers can target Facebook’s 1.48bn daily users by leveraging a rich cache of personal data. Beyond major brands, the accessibility of the duopoly’s ad buying tools has attracted a long tail of small- and micro-advertisers, creating a competitive advantage which has been core to revenue growth.”

    Against this backdrop, WARC’s research on the duopoly highlights three key trends:

    Google and Facebook are directly competing for video dominance: The value of the online video market across WARC’s 12 key markets – Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Russia, UK, US – is $30.2bn, which equates to 21.5% of linear TV, and is growing rapidly. Much of this money is spent on social media sites, including Facebook and YouTube (e.g. 86%, or £1.9bn in the UK).

    Both Google and Facebook hope to unlock brand budgets while also controlling the trade of targeted performance advertising. Regulation appears to be the principle threat to the duopoly’s growth, which currently shows no sign of a significant slowdown.

     

    Google is battling Amazon on two fronts to defend its search market dominance: Google handles 63,000 search queries per second – or two trillion in an average year – but its dominance of the paid search market may soon come under threat from Amazon. The e-commerce giant is developing its own search business, looking to pair advertisers with consumers close to the point of purchase.

    Whilst WARC expects Amazon to make $13.9bn from advertising this year (compared to Google’s $107.4bn), its ad business is growing much faster than Google’s, with 69% of marketers in a recent WARC survey stating that they intend to up their ad investment on Amazon this year.

    Amazon, which has a rich database of consumer purchasing habits, has also stolen a march on Google in the emerging area of voice search. Its Echo devices are used by 63% of American smart speaker owners, well ahead of Google’s Home devices on 26%.

     

    Younger Americans are leaving Facebook’s core platform for Instagram: Instagram is now the main driver of daily user growth for Facebook, with estimates suggesting that as many as 15m US users have left Facebook’s core platform since 2017.

    Instagram’s rise in popularity hasn’t gone unnoticed by marketers, with Instagram recording a net budget increase (the number of practitioners intending to increase budgets minus the number intending to decrease) of 67% in a recent WARC survey, ahead of Amazon on 63%, YouTube on 60%, and Facebook on just 13%.

    Facebook is responding by pivoting to an encrypted messaging service to regain consumer trust, and to build a secure environment for online payments. The company spent $1.1bn on advertising worldwide last year in the wake of the Cambridge Analytica scandal.

     

    Global media analysis – The Duopoly

    28.6% Google and Facebook’s combined share of global adspend this year, up from 24.5%in 2018

    41.0% search and social media’s share of US adspend

    51.8% share of attainable users Facebook reaches every day

    61.4% the duopoly’s expected share of the online ad market this year

    82.7% Facebook’s share of US social adspend in 2018

    86.0% social’s share of UK online video advertising spend

    Other key media intelligence new on WARC Data

     

    Seven in ten companies are not GDPR compliant

    TV’s reach key to cross-channel campaigns

    Flipkart lags behind Amazon India in adspend

    5G to triple mobile speeds by 2022

    94% of UK youth access TV streaming services

  • Despite healthy top line growth, the research suggests that total internet adspend – inclusive of desktop, mobile and tablet – will decline by 7.2 per cent

    WARC forecasts global adspends to grow 4.3S% to $616bn

    By A Correspondent

     

    New forecasts based on data from 96 countries by WARC predict a 4.3 per cent rise in global advertising spend this year, pushing total investment to over US$616bn. This follows on from a 5.4 per cent rise in 2018 – the strongest growth since 2011 – according to WARC’s latest Global Ad Trends report.

     

    Despite a healthy topline growth, the research suggests that total internet adspend – inclusive of desktop, mobile and tablet – will decline by 7.2 per cent this year beyond the Google and Facebook duopoly. Conversely, ad income for the two online giants is expected to rise 22.0per cent to US$176.4bn, equating to a combined share of 61.4per cent of the online ad market (up from 56.4per cent in 2018).

     

    Said James McDonald, Data Editor, WARC, and author of the research: “While advertising investment is stable at the top line level – maintaining a 0.7per cent share of global GDP since 2011 – the market’s undercurrents have changed dramatically in recent years. The amount of ad money available to online publishers beyond Google and Facebook is now in decline, and the repercussions are potentially far-reaching, with several high-profile announcements of job cuts seen among online publishers already this year. Print publishers have already been severely hit by the migration of ad dollars online, and while traditional media excluding print have fared admirably to date, their collective take of ad investment is also trending downwards.”

     

    The report states that Internet is the driving force in global advertising growth, with spend expected to rise 12.1 per cent to US$287.4bn worldwide this year. This would give internet a 46.Z per cent share of media spend globally, but in the US – the world’s largest ad market – internet is expected to account for over half (54.0per cent) of all media spend for the first time this year.

     

    Within internet, mobile adspend is expected to rise 21.9 per cent to reach US$165.7bn in 2019, placing it as the second-largest ad channel worldwide across 96 markets; however, across WARC’s 12 key markets – Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Russia, UK, US – mobile is predicted to overtake TV to become the largest ad channel this year.

     

    Globally, TV will remain the largest single advertising medium in 2019, attracting US$195.5bn, though this represents a 1.3per cent dip from 2018. Despite this, TV spend will have grown 0.4per cent each year on average since 2011.

     

    Print continues to lose share, with a further dip of 9.5per cent predicted in 2019. Legacy news publishers in particular are feeling the impact, with many looking to diversify their businesses to make up for lost ad revenue.

     

    Out of home (OOH) is benefitting from the increasing penetration of digital sites in advanced markets, with digital out of home (DOOH) expected to account for all of the 2.3per cent growth in OOH this year (as it already does in the UK).

     

    Elsewhere, radio adspend is forecast to grow 1.0per cent to US$32.5bn this year, following on from a 1.2per cent rise in 2018. Cinema is expected to be the only ad channel other than mobile not to lose share of global advertising spend this year; cinema spend is expected to rise 7.7per cent to US$4.7bn.

     

     

  • Digital's share of total global OOH adspend is expected to rise to 37.3 per cent

    Warc report predicts digital OOH spend to reach $14.6bn this year

    By A Correspondent

     

    Spend on digital out-of-home advertising (DOOH) — i.e. video content and/or digital signs located in high traffic public locations such as high streets, airports, bus shelters, subways and malls — is expected to grow 10.1 per cent each year between 2018 and 2021, accounting for the entirety of growth in the out of home (OOH) market as spend on traditional sites begins to decline from next year.

     

    Digital’s share of total global OOH adspend is expected to rise to 37.3 per cent — or $14.6bn — this year, up from 34.8 per cent in 2017, 32.4 per cent in 2016 and 22.7 per cent in 2012. The rapid growth of DOOH is driven in part by the higher cost-per-thousand (CPM) the format commands, but also the rising penetration of digital panels and the opportunity to combine data-driven targeting with powerful, dynamic creative.

     

    It further states that major providers are accelerating investment in digital sites, and this will further fuel growth over the coming years. JCDecaux is building on its existing base of 59,744 digital screens worldwide with the ongoing digitalisation of street furniture in New York, Chicago and London. Clear Channel added 450 new digital screens last year, taking its global total to 14,510, while Lamar intends to add 300 screens in 2019, adding to its existing base of 2,800.

     

    In terms of markets, adspend figures from the latest AA/Warc Expenditure Report show half of UK’s OOH ad investment is expected to be spent on digital sites this year, equating to £593m ($770m). Magna forecast spend in the US to reach $1.2bn, up from $582m in 2012. The Direct Place-based Advertising Association (DPAA) believes $100m of this will be traded programmatically, up from $65m in 2017.

     

    In Germany, where Google is exploring DOOH opportunities, spend is expected to reach $285m — 18 per cent of the OOH market and more than double the amount invested two years ago; and in France, the share is forecast to be 11.9 per cent ($183m) this year.

     

    Data from the Outdoor Advertising Association of America (OAAA) show that digital billboards now account for 21 per cent of all billboards in the country, and research by Nielsen show that approximately 60 per cent of US consumers see a digital billboard each month and 37 per cent see one each week.

     

    In the UK, DOOH plays a core role in the daily commute, generating £152m in adspend for Transport for London. The power of the medium is such that Global, UK’s largest commercial radio group, recently moved into the DOOH sector by acquiring Exterion, Primesight and Outdoor Plus, gaining 30 per cent in market share.

     

    A strength of DOOH is the delivery of dynamic creative, using real-time and predictive triggers to ensure the most relevant ad is surfaced to the right people, in the right place, at the right time. The rise of digital screens, particularly on the high street, gives advertisers more choice in where and when their ad is placed, while the creative itself — especially if video — can be powerful.

     

    Said James McDonald, Data Editor, Warc: “The combined power of digital out of home and mobile location data can be used to add greater targeting capabilities to a broadcast medium, serving programmatically-traded creative by the hour to the right people, in the right place, at the right time. This is an enticing prospect for advertisers looking to leverage digital’s strengths without the risk of ad blocking, fraud, and risk to brand safety.”