Digital’s share of media investment will continue to rise, with total online ad spend forecast to surpass $200bn next year, according to separate reports from two of the industry’s largest media media buying groups, with both GroupM and Zenith forecasting the continued dominance of Facebook and Google.

Total global media spend is forecast to hit $558bn in 2018, an increase of 4.3% year-over-year, according to GroupM, which claimed that digital will account for 36.4% of spend next year, with Zenith separately reporting that advertisers’ faith in online advertising has been buoyed in recent years.

A common thread identified in both reports is the continuing dominance of the internet’s large platforms when it comes to capturing growth in digital ad spend, with Facebook and Google – commonly referred to as ‘the duopoly’ – capturing the bulk of market growth outside of China.


Zenith’s figures

Publicis Groupe’s Zenith also forecast that internet advertising’s share of global ad spend to continue to rise, reaching 40% in 2018 and 44% in 2020, with its market value hitting $225bn by the close of the decade.

Zenith also forecast that by 2020 internet ad spend will account for 44.6% of total ad spend in the US, compared to leading digital markets such as Sweden and the UK where brands spend as much as 60% of their ad budgets online.

Zenith’s report also points to improvements in how it has been able to demonstrate the ROI of internet ad spend for brands, this has subsequently increased their willingness to invest ad spend online, according to Jonathan Barnard, Zenith, head of forecasting.

He highlighted how the agency’s ROI Tracker tool, based on almost 1 million consumer interviews over the past 13 years has helped brand advertisers, as well as those with smaller budgets, better track how their media investments perform.

“For the first time Zenith has been able to demonstrate the ROI of internet ad spend, not just its scale. We used our proprietary Touchpoints ROI Tracker tool to compare internet ad spend to internet brand experience over the past few years,” read the report.

Speaking separately with The Drum, The 4A’s Kaplowitz spoke of the buy-side of the industry’s ambition to achieve accurate cross-channel measurement. “Media agencies are focused on how to address better measurement in everything from cross-channel to out-of-home measurement that’s above and beyond what is being done on traditional television,” she added.


Dominance of ‘the duopoly’

Barnard later spoke of how much of the growth in digital ad spend was being driven by small-to-medium businesses (SMBs), and how this is likely to bolster the fortunes of some of the internet’s largest platforms, a sentiment echoed by GroupM.

“These businesses spend almost exclusively on Google and Facebook because these platforms offer them simple self-serve tools to create, plan and execute their campaigns, and they can use small budgets effectively in targeted local areas,” said Barnard.

Both the WPP and Publicis Groupe entities pointed to the ongoing dominance of the internet platforms with Google and Facebook – aka ‘the duopoly’ – forecast to capture the majority of growth, although both were keen to point out some stalking horses.

Between this year and 2020, internet advertising will account for 94% of the growth in overall ad spend and most of this will be captured by just five big platforms – Google and Facebook, plus the Chinese platforms Baidu, Alibaba and Tencent.

Outside of China, Facebook and Google accounted for 96% of the growth in internet ad spend last year, with Barnard reporting that brands looking to achieve their marketing KPIs have “few alternatives to the duopoly” if they are to use the internet as the advertising medium of choice.

Meanwhile, GroupM reported that both Facebook and Google would account for 84% of digital investment in 2017, a statistic that counts as “exceedingly bad news for the balance of the digital publisher ecosystem.”

But these behemoths might not get everything their own way. Ed Gaffney, GroupM, managing partner, director of implementation research and marketplace analytics, pointed to the growing presence of Amazon in the digital advertising sector, and how it could potentially rival the dominance of Facebook and Google.

“Conservatively, GroupM believes the sum of Amazon’s on-platform search and display advertising combined with their off-platform advertising revenues is in the low single-digit billions,” read the media agency’s report.


Programmatic buying is not growing as quickly as thought

GroupM’s report also highlighted how programmatic buying is expected to grow along with digital’s share of the market, with such budgets expected to account for 20% of all digital spend outside of social.

However, concerns over the programmatic supply chain, as highlighted in several high-profile controversies in 2017, has meant the growth of such budgets has not been as fast as previously expected, according to GroupM.

GroupM reported that many clients have moved to whitelist-only approaches to increase safety but this does limit reach and increase prices, according to the report, which later went on to highlight how the group hopes initiatives such as ads.txt will help “eliminate interloping middlemen and their associated fees.”

Kaplowitz concluded: “Right now, the spend will continue to grow in digital because that’s where consumers are spending time, but there’s also going to be a lot more scrutiny is placed on how money will be spent and the way that people tend to assess the impact of that spend in those environments and whether or not it’s worth the risk.”

This article was originally published on The Drum. Read more.

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