Health Report: The Digital Advertising Economy

The average person spends six hours a day online. Advertisers know this. It’s why they are switching their spend to digital – especially mobile.

Here is a deeper dive into the big trends.

In a recent post, we looked at the state of the mobile app economy. Happily, that market is flourishing. After 11 years, there is no sign of a slowdown. Consumers spent $101 billion on apps in 2018. That is 75 percent up on 2016 when the total was just under $60 billion.

But, as we said in that report, the above number only comprises direct app revenue from premium downloads, in-app purchases and so on. Notably, it does not reflect any associated advertising revenue.

Evidently, this is a significant sum. Mobile advertising – both in-app and on the web – is a vast business.

In fact, it’s starting to dominate the general market for digital advertising, which is, in turn, overshadowing the traditional media space.

Let’s explore those numbers more closely…


Digital now takes half of all ad spend

In 2019, digital ad spending will hit $333.25 billion. So, for the first time, digital will account for roughly half of the global ad market, says eMarketer.

Of course, in many countries, digital is already the dominant ad medium. eMarketer lists 10 that have reached this milestone: China, UK, Norway, Ireland, Denmark, Sweden, Australia, US, New Zealand, Canada.

Mobile has surpassed desktop

Ten years ago, when the first mobile ads appeared, some people questioned whether mobile would ever be a suitable platform for advertising. The phone was for talking, not watching, right? Well, we know how that turned out.

Today, mobile dominates the digital marketing landscape. Certainly in the world’s biggest market, the US. According to IAB research, mobile’s share of internet advertising revenue increased to 62.5 percent in the H1 2018 (up from 54.1 percent in H1 2017).

Mobile ownership is now past 5 billion

What’s driving mobile advertising? Mobile ownership. There are now 5.11 billion unique mobile users in the world. The number rose 100 million in a year. That’s just two percent up in a year. We are reaching peak mobile.

The rise of mobile is making the internet available to nearly everyone. Every second, there are 11 more people connected. There are 4.39 billion internet users in 2019, which is nine percent up in a year.

The internet is also getting faster. 12 countries have average fixed internet connection speeds of more than 100 MBPS, while 10 support mobile connection speeds in excess of 50 MBPS.

Most people spend six hours a day online

The average internet user spends 6 hours and 42 minutes online every day. Of the top 14 countries, the most addicted is the Philippines, where inhabitants spend 10 hours and two minutes on the internet. Japan’s citizens spend three hours 45 online.

TV is resisting the digital advertising wave

It’s obvious that digital advertising is obliterating many of the established offline channels. Newspaper, local listings, etc – they’re all being displaced. But not all old media is dying.

According to Zenith Media, TV is holding up. Yes, it has lost share, but it still offers a capacity to build reach that no other format can match. For this reason, TV will still command 31.2 percent of all global ad spend in 2020.

Here is how the advertising formats’ shares breakdown by percentage of spend:

TV: 2017 – 34.1% / 2020 – 31.2%

Mobile internet: 2017 – 19.8% / 2020 – 29.3%

Desktop internet: 2017 – 17.8% / 2020 – 15.3%

Newspapers: 2017 – 9.5% / 2020 – 7.3%

Outdoor: 2017 – 6.7% / 2020 – 6.3%

Radio: 2017 – 6.2% / 2020 – 5.7%

Magazines: 2017 – 5.2% / 2020 – 3.8%

Cinema: 2017 – 0.7% / 2020 – 1.0

A quarter of digital ad spend goes on in-app advertising

This is a pretty extraordinary number. It comes from Forrester, which asked 336 media-planning decision makers in the US, EMEA, and Singapore how they allocate their digital budgets. The answers were as follows:

Mobile in-app – 22.3 percent
Mobile web – 22.2 percent
Digital out-of-home – 19.9 percent
Desktop – 18 percent
Connected TV – 19.9 percent

Digital and mobile advertising is moving to video

If mobile is becoming the dominant digital ad platform, video is becoming the dominant form of advertising media. IAB reported that, in the US, video ad revenues rose to $7.0 billion in HY 2018, up 34.8 percent from $5.2 billion in HY 2017. Meanwhile, video ad revenues on mobile now comprise 59.7 percent of all digital video ad revenues.

Amazon is challenging the Facebook/Google duopoly

Amazon is the growing force in the digital ad space. The retailer is not generally thought of as a player in marketing, but the company has been carefully rolling out CPC and display ads and data insights.

eMarketer says Amazon grew its US ad business by 50 percent in 2018 and will take its overall market share to 8.8 percent in 2019. US advertisers spent $4.61 billion on Amazon’s platform in 2018. That compares to a predicted share of 37.2 percent for Google and 22.1 percent for Facebook.

Two-thirds of people are mobile gamers

Games are an obvious target for digital advertisers. This is because mobile has made gaming entirely mainstream. GlobalWebIndex says more than one billion people stream games over the internet every month. And they’re doing it on the smartphone. The stats say 66 percent of people play mobile games, compared to 23 percent for console gaming.

There are 3.5 billion social media users

Social media is another key destination for digital ad dollars. The number of people using social media reached almost 3.5 billion at the start of 2019. That’s around 45 percent of the global population. However, social media use is not evenly distributed. In 16 countries, usage stands at less than 10 percent.

The average social media user spends 2 hours and 16 minutes each day on social platforms. The top social media companies by active user account are:

Facebook: 2.271
YouTube: 1.9
WhatsApp: 1.5
Facebook Messenger: 1.3
WeChat: 1.08
Instagram: 1
QQ: 803
QZone: 531
TikTok: 500
Weibo: 446

Others include Snapchat at 287 million and Twitter at 326 million.

The speed with which advertising has gone digital, and then to mobile, is pretty astonishing. What’s certain is that this market will not stand still. The acceleration of connection speeds (thanks to 5G) and the evolution of new devices (possibly wearables, maybe foldables) is sure to bring further innovation. The big challenge will be anticipating how the next big change will play out.

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