Digital ROI catches up with fast-growing digital adspend
With the Internet on course to account for 94% of global adspend growth between 2017 and 2020, new research from Zenith has found that the effectiveness of internet advertising has finally caught up with digital adspend.
It is the first time Zenith has been able to demonstrate the ROI of internet adspend and compare it to internet brand experience over the past few years.
While brands had previously “struggled” to make effective use of internet advertising – with spend not matched by the resulting ‘brand experience’* – in 2016 brand experience finally exceeded budget share.
In 2014 advertisers spent 27% of their budgets on internet advertising, which produced only 21% of brand experience.
By 2015 it accounted for 30% of both budgets and paid brand experience, before tipping over in 2016, when internet advertising accounted for 34% of global ad budgets but produced 35% of brand experience.
Zenith expects internet advertising’s share of global adspend to continue to rise, reaching 40% in 2018 and 44% in 2020. Its value will rise from US$203bn in 2017 to US$225bn in 2020.
The share of advertising expenditure allocated to internet advertising varies widely across the world. In the most advanced markets (Sweden and the UK) it will account for more than 60% of total expenditure next year, and it will account for between 50% and 60% in another six (Australia, Canada, China, Denmark, Norway and Taiwan).
Five big platforms capturing digital growth
The internet is driving the great majority of global growth in advertising and will account for 94% of the growth in adspend between 2017 and 2020 – with most of this captured by just five big platforms: Google and Facebook, plus the Chinese platforms Baidu, Alibaba and Tencent.
Between them, these five platforms increased their share of global internet adspend from 61% to 72% between 2014 and 2016, and captured 83% of the growth in internet adspend over that time.
Baidu, Alibaba and Tencent accounted for 54% of the growth in internet adspend in China, while Google and Facebook accounted for 96% of the growth in internet adspend in the rest of the world. Between them Google and Facebook accounted for 76% of internet adspend outside China in 2016.
Big countries adding most ad dollars, big cities driving growth
Zenith forecasts that just two countries – the US and China – will contribute 47% of new ad dollars between 2017 and 2020, while the five biggest markets – the US, China, Japan, the UK and Germany – will contribute 57%.
Big cities are driving global adspend by concentrating growth in productivity, innovation and trade, with Zenith forecasting that the top 10 cities alone will contribute 12% of all global adspend growth this year, and that the top 725 will contribute 60%.
Between 2016 and 2019, adspend in the 10 biggest-contributing cities will grow by a total of US$7.5bn, representing 11% of growth over these years. These 10 cities will be, in descending order: New York (where adspend will grow by US$1.4bn), Tokyo, Jakarta, Los Angeles, Shanghai, Houston, Dallas, Beijing, London and Chicago (which will grow by US$0.6bn).
“We are seeing a battle played out in business, marketing and media between big players and small players,” said Vittorio Bonori, Zenith’s global brand president.
“Growth is coming from big countries and big cities, and being captured by big platforms. Brands should focus on upstream strategy, data-informed UX planning and downstream automation”.
*Brand experience is a combination of two factors: reach (how likely consumers are to encounter brand messages at each touchpoint) and influence (how likely each message is to consumer attitudes or behaviour). It covers all touchpoints across paid, owned and earned media, however, in this instance, Zenith only measured the brand experience of paid media.