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Video to account for a third of all online display spend: Highlights for publishers, from WARC’s Adspend Outlook

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Global advertising spend is set to rise by 7.1% to $660B this year, according to WARC’s latest Global Advertising Trends – The Adspend Outlook report. The growth is driven by a 13.2% ($335.4B) increase in internet investment, making it account for over half (50.9%) of the global total for the first time. 

Internet ad growth has been far stronger than the state of the global economy would suggest, rising seven times faster on average since 2010.

Global Advertising Trends – The Adspend Outlook

The report presents projections for 2020 based on 96 markets. 

Here are key insights for publishers:

Google projected to have 77% share of the global search market

Advertising revenue for Alphabet and Facebook is forecast to reach $231.9B this year, which is equivalent to 35 cents in every ad dollar. Traditional media, combined, are also expected to grow by 1.5% to $324.2B for the first time since 2011, boosted by a return to growth for TV.

Alphabet’s ad income is predicted to rise 10.5% to $149B worldwide. This means, it will take 23 cents in every ad dollar. 72.4% ($107.8B) of this will come from the company’s core Google search platform – this gives Google a 77% share of the global search market.

YouTube is expected to earn a further $18.5B for Alphabet in 2020, a 22.1% rise from 2019, and equivalent to 29% of all online video adspend worldwide. 

Facebook’s ad income is forecast to rise 19% to $82.9B in 2020, accounting for 80.9% of social media advertising spend worldwide. Much of this growth is organic, though the social network will benefit from the US presidential campaigns this year, according to the report.

Amazon and Snapchat are expected to record double-digit growth again this year, but research from WARC’s Marketer’s Toolkit suggests some practitioners are looking to reduce spend on Twitter in 2020.

Social media expected to deliver close to 63% of online display growth

Social media spend is expected to rise by a fifth to $69.8B within WARC’s 12 key markets. This equates to 47.1% of all online display spend in these markets, up from 44.8% in 2019. Social media is expected to deliver close to 63% of online display growth this year.

Online video, much of which is delivered via social platforms, is projected to rise in value by 20.2% to $49.2B this year. This means it would account for a third of all online display spend, up from a share of 31.6% last year. 

Marketers invested $15.1B in YouTube in 2019, an increase of 35.8% YoY. This rate of increase is more than double the level registered by Google Search.

81% of the practitioners surveyed for WARC’s Marketer’s Toolkit intend to increase investment in online video (including social media) this year, ahead of all other channels. 56% plan to raise investment in search, with spend set to rise 12.4% to $122B – 41.8% of all internet.

Programmatic approaching 70% of online display

Programmatic will take nearly 70% of online display at $126B. This includes all online display formats and platforms, including social media and online video, as well as banner ads and rich media.

It marks a 3.9pp rise from 2019, and is double the level seen in 2014. The seven markets ahead of the global rate include the UK (88.9%), the US (84.5%), Denmark (82.0%), France (80.2%), Germany (73.3%), Russia (72.6%), and Bosnia and Herzegovina (69.5%). 

Ad spend to rise across all product categories

Adspend is set to rise across all of the 19 product categories monitored by WARC. The financial services sector is expected to rise by 11.8% to $53.4B in 2020, ahead of all others and the global rate of 7.1%. Online formats will take up 53.9% of this spend.

The retail sector is also shifting towards online advertising. The report predicts that 42.5% of the sector’s ad spend will go to online formats, and 11.5% to print. In comparison, both internet and print drew a quarter of retail investment in 2015

The impact of Coronavirus outbreak

These findings have not accounted for the possible impact of the Coronavirus (COVID-19) outbreak. James McDonald, Managing Editor, WARC Data, comments, “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.”

As of now eCommerce does not seem to be affected. According to a Vogue Business in China report, while retail footfall has plummeted and stores have been temporarily shut down, online channels have quickly become one of the only ways to interact with consumers.  

L’Oréal CEO Jean-Paul Agon said that the company’s brands outperformed on Alibaba’s Tmall this February, compared to the same period last year. This offset the negative impact caused by Covid-19. Allbirds China’s Tmall traffic increased steadily after the outbreak, and the growth of online sales was stable, according to its Marketing Director, Tina Ting. 

“While the epidemic affected the offline business, which temporarily curbed overall sales growth, our headquarters is still confident about the Chinese market and will not lower the full-year forecasts.” Ting said.

For a detailed overview of the findings, please download the full report from WARC:
Global Advertising Trends – The Adspend Outlook