Over the past decade, we have heard time and again about the rise of digital spend, the decline of TV ad dollars and the inevitable overtaking of TV by Digital. While this prognosis was no secret, it had still yet to occur. The general perception was that with the continued surge of over-the-top content, both subscription and free, with Netflix, YouTube, Facebook Live, HBO Go and all the rest, combined with the proliferation of cross-platform, anywhere-you-are access, that day would finally come. According to a recently posted Ad Age article, that day has indeed come and Digital is the new top channel when it comes to Advertising spend in the United States.
Digital Ad Revenue Generators
Where are these Digital dollars going? Having a greater understanding of what is happening to these shifting dollars is necessary to help put the headline into greater context.
- Mobile search accounted for over 17 billion in spend and is credited with fueling mobile’s growth to over half of all Digital ad revenue in 2016.
- Social media advertising increased nearly 50% from 2015 as well, accounting for over 16 billion in spend. The biggest contributor to this total was Facebook who generated $14 billion in US spend in 2016 (Facebook Q4 2016 Results).
- As a new standalone category in the IAB survey, digital radio broke the $1 billion in advertising revenue mark.
- Digital video accounted for 12.5% of the total digital spend, a 53% increase from 2015.
Simply put, mobile search, social media, digital radio and digital video are the main benefactors.
Timing Is Everything
The immediate question now becomes: is this a one-year blip or the new order? The digital ecosystem has never been more questioned than it is now: viewability, ad fraud, reporting & measurement inaccuracies, ad tech supply chain mysteries, brand safety, and more. Brands are more cautious and skeptical of the digital space than ever before. In fact, with controversies surrounding the most trusted partners (Facebook and Google/YouTube), that skepticism has turned into some ad spend being pulled.
This record year for digital in the US ad industry comes despite the growing concerns surrounding viewability, fraud and basic metrics across advertisers worldwide. In our joint study with the World Federation of Advertisers, two thirds of respondents representing more than 50 global advertisers and an annual advertising spend of over 80 billion dollars stated that they planned to increase their investment in online advertising in 2017-18, with some increasing by as much as 40%. However, the over-arching theme across the study indicated low confidence in the effectiveness of online advertising and the tools available to measure effectiveness with the majority stating that they feel online advertising does not represent value for money.
With the diverging attitudes on digital advertising amongst advertisers today and the controversies around digital worldwide, the news of digital overtaking TV in the US market couldn’t have come at a more intriguing time for the industry. As the Upfronts and the Digital Content NewFronts kicking off, there are certainly many topics to be covered on advertising’s biggest stage and some intriguing headlines should emerge. Is this the beginning of TV’s decrease, or simply a one-year outlier? We might be just at the start of seeing widespread hesitance from advertisers who jumped on the digital bandwagon; but if digital publishers could solve for the challenges of viewability, transparency, and other issues afflicting digital advertising, digital’s reign could be an ongoing trend across the globe.
As leading experts on media effectiveness and multi-channel analytics, we work with over 80 of the top 100 advertisers. In the US, our cost transaction database is roughly $8 billion of US national broadcast activity over the last two years and our analysis of the actual advertising investment data from many of the world’s largest brands allows us to provide insights into the true effectiveness and trends of advertising today. Learn more about our joint study with the WFA here or reach out to us at info.US@ebiquity.com for more information.