Social media advertising spend set to overtake newspapers by 2020

A report on global advertising expenditure says that social media advertising is growing at 20 per cent a year and will be worth US$50.2 billion by 2019

PUBLISHED : Tuesday, 06 December, 2016, 4:28pm
UPDATED : Tuesday, 06 December, 2016, 4:29pm

Global advertising spend on social media is set to overtake newspapers in the next four years, according to a report released on Monday.

Social media advertising is growing at 20 per cent a year and by 2019 will be worth US$50.2 billion compared to US$50.7 billion for newspapers, ad agency Zenith said in its “Advertising Expenditure Forecasts” study. But by 2020, the report adds, social media will be “comfortably” ahead.

Advertising on platforms like Facebook and Twitter will account for 20 per cent of all internet advertising in 2019, up from 16 per cent this year, according to the report.

“Social media platforms have benefited from the rapid adoption of mobile technology, using it to embed themselves into their users’ daily lives. For many users, social media is the focal point of their social lives as well as their main source of news. Social media ads blend seamlessly into the news feed, and are much more effective than interruptive banner formats, especially on mobile devices,” Zenith’s report said.

Advertising resilient

The uptick in social media spending is part of broader growth in the ad industry. Global advertising expenditure will grow 4.4 per cent in 2017, matching the same pace seen in 2016, despite political uncertainties such as the U.S. presidential election and the U.K.’s referendum on European Union membership, according to the report.

Zenith forecasts ad spend to growth 4.4 per cent in 2018 and 4.1 per cent in 2019.

“Global adspend growth has been remarkably stable since 2010, growing at between 4 per cent and 5 per cent a year, generally at or below the growth rate of global GDP (gross domestic product). Before the financial crisis, advertising would typically exaggerate the wider economy, growing faster in times of expansion and shrinking faster during recessions, with frequent changes in year-on-year growth rates. More recently the global ad market appears to have entered a phase of more stable growth,” the report said.

Online video not denting TV

Online video is another fast-growing area, with ad spend on the format growing 18 per cent per year. By 2019, online video advertising expenditure will total US$35.4 billion globally, ahead of the US$25 billion forecast for radio. Still, online video advertising is nowhere near the size of the TV market.

“Online video is also benefiting from the spread of mobile devices, as well as the development of high-speed mobile data connections and improvements in handset displays. It is becoming common for brands to use online video as a complement to television, but for most it does not make sense to use it as a substitute. Even by 2019 online video advertising will be less than a fifth (18 per cent) of the size of television advertising,” Zenith noted.

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