March 31, 2017 by Paul Dughi
For the first time, more dollars are being spent on internet advertising than on traditional television. That news comes from Zenith (a Publicis company) in taking a look at 2017 internet advertising dollars and projections.
“Internet advertising has contributed all of the growth in global ad spend since the beginning of the decade, and has stimulated much of the innovation we’ve seen in the market. Innovation is proceeding as fast as ever, and we believe that this is what will continue to drive brand growth for advertisers.” – Vittorio Bonori, Zenith’s global brand president
Internet spending continues to grow, although the growth rates has slowed. That’s to be expected considering the enormous growth over the years. Zenith reports internet ad spend grew 17% last year after a 20% rise in 2015. They predict a further slowing, but still double digit growth through 2019.
Digging Deeper into the Numbers tell a slightly different story
Standard Media Index (SMI) took a further look into the spending on US digital advertising. If you accept its findings that 17% increase in 2016 looks a little different when you go deeper into the numbers.
After years of high double-digit growth in online ad sales, the market slipped into mid-single digits in 2016. By 4Q 2016, the number slipped into the low single digits, and in December, the YOY growth rate slipped to less than 1 percent.
“Brands today are marketing in a digital world and we have seen the rapid growth in the sector in the past several years. With that being said, the trajectory of digital spend has recently hit a major speed bump as brands question the efficacy of the medium,” – James Fennessy, CEO of SMI
As Bob Hoffman points out in his blog, The Ad Contrarian, when you take the two major players (Google and Facebook) out of the equation, the numbers look even worse. Overall, it shows a net growth rate of… minus 2.
By comparison, spending on TV ads grew 4.4% in 2016 and 5.5% in December YOY. That’s not the double digit growth that we’re used to seeing from internet advertising, but it’s a strong story to tell for TV in 2016.
“The big story we saw in Q4 was a recommitment to television for a number of big categories of advertisers. Retail, Telco’s and Consumer Electronics have not seen the outcomes they expected from digital and have moved back to the medium they have trusted for decades. Retailers, in particular flooded back to TV over the holiday period after moving way too much to digital in 2015.” – James Fennessy, CEO of SMI