According to WARC, the international marketing intelligence service, global advertising spend is set to rise by 7.1% to $660-billion this year, buoyed by 13.2% growth in Internet investment. But the service indicates that traditional media, combined, are expected to record 1.5% growth to $324.2-billion — the first rise since 2011.
WARC indicates that the traditional media total is expected to be boosted by a return to growth for TV; here, spend is set to rise 2.5% to $192.6-billion, helped in no small part by the United States presidential election campaigns and the Summer Olympic Games in Tokyo.
The service says that advertising revenue for the 'duopoly' (Alphabet and Facebook) is forecast to reach $231.9-billion in 2020, having topped the TV total for the first time in 2019.
Alphabet's ad income is forecast to rise by 10.5% to $149-billion worldwide — equivalent to 23 cents in every ad dollar. A full 72.4% — $107.8-billion — will come from Alphabet's core Google search platform.
WARC adds that this gives Google a 77.0% share of the global search market. YouTube is expected to earn a further $18.5-billion for Alphabet in 2020 — a 22.1% rise from 2019 and equivalent to 29.0% of all online video adspend worldwide.
Facebook's ad revenue is projected to rise 19.0% to $82.9-billion; WARC says that much of this growth is organic though the social network will
benefit from the United States presidential campaigns this year.
Amazon's ad income is set to rise 21.4% to $17.1-billion, Twitter's 9.2% to $3.3-billion and Snap's 34.1% to $2.3-billion. According to the service, all will contribute to an overall rise of 13.2% in Internet ad investment this year, to a total of $335.4-billion — over half (50.9%) of the global total for the first time.
James McDonald, managing editor at WARC Data and author of the research, says, "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," adds McDonald.
"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," McDonald says.
All product categories are expected to see growth in 2020
According to WARC, adspend is set to rise across all of the 19 product categories monitored by the service. The financial services sector is expected to lead growth with a forecast rise 11.8% to $53.4-billion 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 $65-billion.
WARC reports that consumer packaged goods sectors, such as soft drinks (+6.5% to $17.3-billion) and food (+4.9% to $28.1-billion), are expected to grow just behind the global rate in 2020; alcoholic drinks (+6.9% to $9.7-billion) and automotive (6.8% to $57.2-billion) are roughly par.
WARC has presented the following trends for 2020:
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.-billion this year — 22.6% of global advertising spend (up from 21.9% in 2019). This is before the deduction of traffic acquisition costs, which amounted to $30.1-billion in 2019.
- YouTube: Advertisers are forecast to spend $18.5-billion on YouTube this year — a rise of 22.1% from $15.2-billion 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 $107.8-billion this year — 77.0% of global search spend and 16.3% of all adspend.
- Facebook: Advertisers are expected to spend $82.9-billion 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 $17.1-billion, 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 $2.3-billion in 2020, with 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 $3.3-billion representative of a 9.2% rise in 2020.
Trends by media and format
- TV: Spend is forecast to rise 2.5% to $192.6-billion, 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 United States — where TV spend is set to rise 4.0% to $62.9-billion. Just over $4-billion will come from presidential campaigns.
- Out of home: Spend across billboards, transport and retail/point of sale locations is forecast to rise 5.9% to $43.5-billion in 2020, 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 $32.8-billion, recouping losses from a 1.3% dip in 2019.
- Print: Spend is set to fall by $3.2-billion, 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 $102.4-billion this year, 15.5% of global advertising spend. Facebook (including Messenger, Instagram and WhatsApp) is expected to draw 80.9% of this investment, or $82.9-billion, even though this share is down from 81.2% in 2019. Just over 42% — $35-billion — of Facebook's ad revenue will come from the United States this year.
- Online video: Spend is forecast to rise 21.4% to $63.7-billion 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 $140.1-billion 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: The total market growth forecast at 8.4% this year to $250.3-billion — following a 4.5% rise in 2019. The Unites States ad market is expected to grow 8.8% to $238.2-billion, while Canada is projected to grow 1.9% to $12.2-billion.
- Asia-Pacific: Advertising spend is expected to rise 7.5% to $205.-billion in 2020, with China (+9.7% to $98.5-billion), Japan (+3.2% to $40.2-bilion), Australia (+2.4% to $13.3%) and India (+15.6% to $11.2-billion) all set to record annual growth.
- Europe: European adspend is forecast to rise 6.9% to $158.7-billion this year, with France leading key market growth at +10.0% (to $18.2-billion). The United Kingdom (+3.2% to $31.3-billion), Germany (+1.3% to $24.9-billion), Italy (+2.7% to $10.5-billion) and Russia (7.6% to $10.5-billion) will continue to see rising investment.
- Latin America: The region is heavily susceptible to the strength of the United States 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 $14.3-billion.
- Middle East: Spend is expected to fall 1.7% to $12.-billion in 2020, following on from a 3.7% fall in 2019.
- Africa: Spend is expected to rise 5.6% to $6.9-billion this year, reversing a 1.5% dip in 2019.
Other new key media intelligence on WARC Data across regions
- Consumers — ad blocking rises to an all-time high of 764 million people
- Brands and advertisers — food, drink and automotive brands see lowest email CTR
- Media and Tech — e-sports investment to reach $800-million in 2020
- Consumers — one-quarter of Americans now own a smart speaker
- Consumers — Netflix subscriptions in Latin America are now topping 30 million
- Media & Tech — NFL, NBA and MLB to draw $4-billion from sponsors in 2020
Europe, Middle East and Africa
- Brands and Advertisers — Southeast Asian brands are the most active on WhatsApp
- Media and Tech — OTT to halve APAC pay-TV growth by 2024
- Media and Tech — Sponsorship investment for Tokyo Olympics to triple
- Consumers — 26% of 18-24-year-olds use TikTok in the United Kingdom
- Brands and Advertisers — Less than half of marketers use consumer data systematically
- Consumers — Connected TV use in Portugal flatlines for the second year
Individuals can download a sample of The Adspend Outlook 2020 report here
For more information, visit www.warc.com/data
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