Growth in internet advertising expenditure set to slow
Internet advertising will exceed half of global adspend for the first time within the next two years, according to Zenith's latest adspend forecasts.
However, by 2021 growth in the category is expected to drop to its lowest rate in two decades.
While internet advertising is set to reach 52% of adspend in 2021 - up from 47% this year and 44% in 2018 - growth is projected to slow to just 9% as the online ad market matures, compared to a growth rate of 17% last year.
“The point at which internet advertising exceeds 50% of global adspend has been approaching for some time, but this is the first time it has appeared in our forecasts,” said Jonathan Barnard, head of forecasting at Zenith.
“However, 2021 will be the first year of single-digit internet adspend growth since 2001, the year the dotcom bubble burst.”
Online video and social media will continue to drive growth in the category, and are forecast to grow at an average rate of 18% and 17%, respectively, to 2021. These channels benefit the most from improvements to smartphone technology, targeting and delivery, and the rollout of 5G.
However, paid search and online classified are expected to be hit the hardest, with online classified expected to decline -1.6% by 2021. Paid search is to grow just 7% in 2021, as the majority of innovation in search is taking place within voice, which is not currently monetised.
According to Zenith, the internet ad market's slowing rate of growth can be attributed to the type of advertiser the internet attracts, as online advertising is largely made up of "very many small advertisers" who spend their entire budgets online.
Meanwhile, large advertisers continue to invest the majority of their budgets in traditional media - even within those categories, such as technology, media and finance, which have "advanced the furthest" in using modern digital channels, Zenith's global brand president Matt James said.
"Even within these [categories], brands still rely on traditional media to create broad mass awareness and reinforce brand values," he added.
Nevertheless, Zenith expects print advertising revenues to continue in decline, while traditional TV revenues will fall at a slow rate every year to 2021.
However, radio is increasing its ad revenue by 1% annually, out-of-home is set to grow 4%, and cinema is growing at 12% a year - though it accounts for just 0.8% of total adspend.