Majority of Global Ad Sales Now Digital
NEW YORK—Digital ad formats have matured to the point that they now represent 51% of all global ad sales, according to Magna’s Global Advertising Forecasts. This milestone will be passed in 2019, as the rate of traditional linear advertising sales (broadcast TV and radio, newspaper and magazine ad pages, out of home) declines by 3% to $290 billion worldwide.
The fastest growing regions are Asia Pacific and Latin America, and the bulk of digital advertising growth will come from ad impressions and links on mobile devices, mostly smartphones, Magna said. The growth of digital advertising is “slowing” to an annual 14% increase in 2019, reaching $304 billion globally due to the near saturation of digital media penetration, Magna added.
The slowdown in growth for 2019 also is due to the “odd-numbered-year” trend in media events (i.e. no U.S. elections or Olympics), according to Magna.
“Global ad spend continues to grow as the economy remains strong in key markets, but two factors are slowing down the growth rates in 2019: one is cyclical (the lack of major events in 2019, following a record year in 2018), while the other is structural: digital ad formats maturing (from 19% in 2018 to 14% this year) as they now account for more than half to total advertising sales. However, product innovation (smart homes, cloud services, OTT, 5G) and marketing innovation (direct-to-consumer brands) will continue to drive ad spend growth this year and next.
Traditional TV’s take will decrease this year by 2% to $175 billion worldwide, but the return of even year events in 2020 will help re-accelerate advertising growth in the U.S. by 5.8% to $233 billion, Magna said. In the U.S., national television’s linear advertising sales will decrease by 3% to $41 billion in 2019.
Television linear advertising is being helped along by the emergence of more “direct to consumer” brands (like Uber and AirBNB), which Magna predicts will grow 40% “from a relatively low base.”
“These brands are particularly attractive to television vendors as they come to the TV market with little leverage and are willing to much higher rates than CPG brands that have been on TV for 50 years and have the scale to negotiate sub-market cost inflation,” Magna said.
In the U.S., media owners’ net advertising sales (NAR) grew by 3% this year to reach $220 billion, an increase of $6 billion and a new all-time high, according to Magna.
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Tom has covered the broadcast technology market for the past 25 years, including three years handling member communications for the National Association of Broadcasters followed by a year as editor of Video Technology News and DTV Business executive newsletters for Phillips Publishing. In 1999 he launched digitalbroadcasting.com for internet B2B portal Verticalnet. He is also a charter member of the CTA's Academy of Digital TV Pioneers. Since 2001, he has been editor-in-chief of TV Tech (www.tvtech.com), the leading source of news and information on broadcast and related media technology and is a frequent contributor and moderator to the brand’s Tech Leadership events.