The digital carrot

Digital is driving global advertising spends today, growing at 15 per cent a year; outpacing expectations and spends on other media

In line with expectations, digital continues to show the highest growth rates, estimated at 15 per cent in 2016 and 13.6 per cent in 2017, outpacing our previous predictions in the September 2015 report. By 2017 digital spend is forecast to reach $161 billion. Digital is clearly the established driver of global advertising market growth, with all other media types showing a low single digit increase or decline. Digital is the leading media type in 12 out of the 59 markets analysed, with the addition of Hong Kong and Estonia since our September 2015 report and with the US, Austria, Germany, Taiwan predicted to join this list by 2018. Driving the consistent growth of digital globally is mobile. Spending in this channel is forecast to grow by 37.9 per cent in 2016 and 30.1 per cent in 2017. The key drivers of this considerable increase in mobile investment include the dramatic shift in time spent on mobile among smartphone and tablet-empowered consumers, increasing reliance on the app economy, as well as improving targeting opportunities that this channel provides.

Growing time spent on mobile is largely linked to consumption of online video, social media and messaging. Online video is expected to grow globally by 34.7 per cent in 2016 and by 31.2 per cent in 2017 with notably strong growth in the US market, a predicted 44.7 per cent in 2016. The rise of mobile-first social media and messaging apps such as Instagram and Snapchat (alongside Facebook and Twitter), is stimulating advertiser interest as they offer the opportunity to build native video campaigns centred around their target audience's unique social data. As a result, each social platform is focusing on video, opening up multiple options for brands and advertisers to create, curate and monetise content.

Globally social media spend is forecast to grow by 29.8 per cent in 2016 and 25.2 per cent in 2017, with the US predicted to have the highest social media growth at 49 per cent in 2016 and 45 per cent growth in 2017. Social media platforms are consistently improving their ability to gather data and provide marketers with actionable insights. This data can be utilised to deliver messages to a more specific audience than ever before. Overall, marketers are using social media as a way to deliver owned media content, not just paid ads. Branded content as a form of advertising is increasingly becoming a more prevalent component of social media investment.

Display (banners) advertising globally continues to grow positively supported by mobile banners, and remains a highly relevant part of digital investment. In 2016 display (banner) advertising spend is forecast to increase by 11.6 per cent in 2016 and 8.7 per cent in 2017.

DECODING THE DIGITAL AD PIE

• Digital accounts for close to 25 per cent of total global ad spends
   
• Mobile is the force behind digital; spending in this channel expected to grow by 37.9 per cent in 2016 and 30.1 per cent in 2017
   
• Online videos take up the most time on mobile, expected to grow globally by 34.7 per cent in 2016 and by 31.2 per cent in 2017; US is the strongest market
   
• Social media spend forecast to grow by 29.8 per cent in 2016 and 25.2 per cent in 2017, with the US predicted to have the highest social media growth at 49 per cent in 2016
   
• Display (banners) advertising, a highly relevant part of digital investment, forecast to increase by 11.6 per cent in 2016 and 8.7 per cent in 2017
   
• Paid search is expected to reach 12.3 per cent of the total advertising share this year, overtake newspapers share of spend in 2016 (11.2 per cent) and 2017 (10.3 per cent)
   
• India is the largest paid search market in 2016 (48.0 per cent), double that of China (20.8 per cent)

 

Paid search spend growth is also coming from mobile as more and more consumers make search queries on-the-go via their smartphones and tablets. This is forcing advertisers to make big adjustments for mobile and focus their attention on delivering their pay-per-click (PPC) ads onto the small screen. Globally paid search spend is forecast to grow by a healthy 10.6 per cent in 2016 and 10.3 per cent in 2017. Paid search is expected to reach a solid 12.3 per cent of the total advertising share this year and overtake newspapers share of spend in 2016 (11.2 per cent) and 2017 (10.3 per cent). Key growth markets for paid search in 2016 include India (48 per cent), China (20.8 per cent) and Canada (12.8 per cent). Russia and the US also forecast double digit growth of 10.6 per cent and 10.2 per cent respectively in 2016.

Excerpted from the Carat Ad Spends Report, March 2016