US DIGITAL ADVERTISING SNAPSHOT - eMarketer

December 2018

US DIGITAL ADVERTISING SNAPSHOT

Digital advertising in the US is on pace to surpass traditional media ad spending by 2019. eMarketer has created this infographic Snapshot to provide a key to US digital ad spending trends, including how digital fits into the total media ecosystem, how mobile fits into digital, and how quickly advertisers across industries are increasing their digital budgets.

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Digital Advertising in the US

Digital advertising is on pace to surpass traditional media ad spending by 2019. Digital ad investments exceeded our expectations during H1 2018 and will now reach $111.14 billion by year's end, above our March 2018 estimate of $107.30 billion. By 2020, digital media will account for almost 65% of total media ad spending.

Print

3.3%

Out-of-Home 3.0% Directories 0.3%

Radio 5.0% Magazine 1.8% Newspaper 1.5%

Print

8.4%

Out-of-Home 3.6% Directories 0.7% Radio 6.4%

Magazine 4.0% Newspaper 4.4%

Desktop/Laptop

16.1%

Desktop/Laptop

15.6%

Digital

64.9%

Digital

49.7%

Mobile

34.1%

Mobile

48.8%

TV

31.2%

2018

TV

23.5%

2020

Key Ad Trends: Programmatic

In the US, programmatic advertising is digital display advertising. We forecast that spending on this form of automated buying and selling will reach nearly $48 billion by year's end. By 2020, US advertisers will transact nearly $69 billion in US digital display ad spending programmatically, accounting for 86.3% of the digital display pie.

How much digital display advertising is bought programmatically?

Programmatic advertising--de ned as the use of automation in the buying, selling or ful llment of digital display advertising--is now the norm. We estimate that more than four of every ve digital display ad dollars in the US today transact via programmatic means. More than four- fths of mobile display and video ad dollars also already ow through programmatic channels.

2018 Programmatic 21.2% ($47.37B)

Digital Display 25.7% ($57.42B)

2020 Programmatic 26.2% ($68.87B)

Digital Display 30.4% ($79.85B)

Total Media Ad Spending $223.70B

Total Media Ad Spending $263.05B

Digital Video vs. TV

We forecast that video ad spending will reach $50.63 billion in 2022, nearly double the $27.82 billion in 2018. This new forecast, for the rst time, incorporates outstream video ad spending gures. And not only are the video numbers substantially higher than those in our March 2018 forecast (because of the inclusion of social media), but the percentage

increases over the forecast period are also higher, with 29.7% growth in 2018 and 9.9% by 2022.

Meanwhile, our TV ad spending gures are unchanged in the current forecast, with small annual percentage decreases in every year of the forecast period except for 2020 (a US presidential election and Summer Olympics year).

2018

TV 31.2% ($69.87B)

Digital Video 12.4% ($27.82B)

2022 Digital Video

TV

17.5% ($50.63B) 23.5% ($68.13B)

Total Media Ad Spending $223.70B

Total Media Ad Spending $289.50B

Key Ad Trends: Mobile vs. Traditional

By 2020, mobile ad spending will surpass all traditional media combined. According to our estimates, mobile will account for $76.17 billion of US media ad spending in 2018. That's more than TV ($69.87 billion)--and it's signi cantly more than print ($18.74 billion), radio ($14.41 billion) and out-of-home ($8.08 billion).

By the end of the forecasting period (2022), mobile ad spending is expected to more than double that of TV. The channel will make up $141.36 billion of US media ad spending, while TV will account for $68.13 billion.

2018

Mobile

48.8% ($141.36B)

Traditional

35.1% ($101.62B)

Traditional

50.3% ($112.56B)

Mobile

34.1% ($76.17B)

2022

In-App vs. Mobile Web

In-app ad spending continues to see steady gains over mobile web, as most engaging smartphone activities become increasingly app-based. In addition, time spent is growing for mobile users with primarily app-based social platforms (Snapchat), digital audio (Spotify and Apple Music) and video (YouTube).

But don't count out mobile web. Programmatic remains a foothold for its ad spend growth, as well as popular user activities like looking for news, reading articles and shopping.

2016

In-App

72.7% ($34.23B)

2017

In-App

77.7% ($44.62B)

2018

In-App

80.9% ($61.59B)

2019

In-App

82.6% ($77.03B)

Mobile Web

27.3% ($12.86B)

Mobile Web

22.3% ($12.83B)

Mobile Web

19.1% ($14.58B)

Mobile Web

17.4% ($16.23B)

Where's Digital Ad Spending Going?

For more than a year now there's been a steady murmur about Amazon's encroachment on the territory of the Facebook-Google duopoly. US digital ad revenues at Amazon

will more than double this year, eMarketer estimates, moving it up the ranks past Oath and Microsoft to take the No. 3 position behind Facebook and Google.

Google

37.1% ($41.28B)

Other***

38.1% ($42.39B)

2018

Amazon

4.1% ($4.61B)

Facebook

20.6% ($22.87B)

Top 3*

61.9% ($68.75B)

Duopoly**

57.7% ($64.15B)

And that increase is clearly still robust. After 2018's arti cial growth spike, eMarketer expects increases of more than 50% per year through at least 2020, when Amazon will enjoy 7.0% of all US digital ad spending.

Top 3*

62.9% ($98.57B)

Duopoly**

55.9% ($87.65B)

Amazon

7.0% ($10.92B)

Other***

37.1% ($58.17B)

2020

Facebook

20.8% ($32.58B)

Google

35.1% ($55.07B)

*Amazon, Facebook and Google; **Facebook and Google; ***Excluding Top 3

How Fast Are Vertical Industries Moving to Digital?

Keeping with the trend of the past several years, retail will far outspend the other industries eMarketer measures, accounting for a 21.9% share of US digital ad spending. US retailers are facing the prospect of ghting or aligning with

Amazon in 2018 as retailers like Best Buy, Nike and Sears are seizing the opportunity to feature their storefronts on the ecommerce giant. Meanwhile, retailers outside of the Amazon ecosystem are dedicated to search advertising on Google.

Other

4.3%

Healthcare & pharma

2.7%

Entertainment

5.1%

CPG

8.8%

Retail

21.9%

2018

Media

6.1%

Travel

8.0%

Telecom

10.7%

Financial services

12.2%

Computing & Consumer Electronics

7.8%

Automotive

12.6%

Media and entertainment have the largest growth rates in 2018, attributable to the fact that both industries have had lower spending historically and therefore show rapid growth from a small base as investment grows. Healthcare and pharma has historically spent the least of all industries, and 2018 is no exception.

Media

24.9%

Entertainment Computing

23.6% & Consumer

Electronics

21.7%

Other

19.6%

CPG

18.7%

Retail

18.7%

Financial Services

18.5%

Automotive

16.9%

Telecom

16.5%

Travel

16.4%

Health Total Digital & Pharma Ad Spending

12.7% 18.7%

Behind the Numbers

eMarketer's US digital ad spending estimates are updated twice a year to keep our subscribers abreast of trends in this business-critical area. For this forecast, we analyze 4,006 metrics from 127 sources, including macro-level economic conditions; historical trends of the advertising market; historical trends of each medium in relation to other media; reported revenues from major ad publishers; estimates from other research rms; consumer media consumption trends; consumer device usage trends; and eMarketer interviews with executives at ad agencies, brands, media publishers and other industry leaders.

For our companies' estimates, we do a bottoms-up analysis of the market, taking into account each company's ad revenues. This information comes from quarterly earnings releases, annual shareholder documents and statements from the executives in earnings calls. Company-speci c data is also evaluated alongside estimates from third-party research rms, and interviews with executives at ad agencies, brands, media publishers and other industry leaders covering these companies.

3 Predictions for Digital Marketing in 2019

This post was contributed and sponsored by Criteo.

Advertising is changing. Facebook and Google own 25% of global ad spend. Amazon is getting into the ad game. Social media is mature, but each channel is anything but stable. In the world of ad-tech, the talk has gone from platforms to ecosystems. Marketers aren't talking through strategies for new platforms anymore. We're talking about strategies for navigating the existing ones.

On the horizon, there are new AI-powered advancements coming to the world of advertising. Chatbots, virtual reality, hyper-personalization?these are things that will become commonplace in 2019. Here are three major trends that marketers should expect next year:

No. 1: Social Engagement = Video

One recent survey from fall 2018 showed that only 36% of US teens use Facebook on a monthly basis. In general, Gen z social media trends point to YouTube, Instagram and Snapchat as the favored channels.

In 2019, we can expect Facebook and Twitter to keep emphasizing streaming video in order to keep up. With competition from visual-first mediums like YouTube, Instagram and Snapchat, it's clear that social needs to be mobile, engaging and movie-like to keep user attention. Watch out for messaging, too?Facebook Messenger recently enabled autoplay video ads within the platform itself.

How do you get users to actually watch video ads? Well, marketers have to start thinking about how to optimize the creative in real-time.

No. 2: CPMs Get a Lot More Interesting

If we've learned anything from major ecommerce players, it's that an ecommerce site can be built into an ecosystem for brands and consumers alike.

New technology and retail-brand partnerships will keep paving the way for retailers to activate not just the shoppers that convert on their website, but the audience that visits. Brands will start paying more on a cost-perthousand impressions (CPM) basis because dynamic product pages will allow them to work with retailers to target the best potential customers for awareness, consideration and conversion.

No. 3: Ads Get Intelligent, Everywhere

Phones, cars, refrigerators, coffee machines. In a smart home, there are more screens than ever before. That marks a big opportunity for marketers, but only if they don't annoy shoppers with irrelevant ads.

The stakes for intelligent, AI-powered ads are going to get higher in 2019 as ad-tech strays into the world of the third, fourth and fifth screen. Companies will start experimenting with even more hyper-personalized ad campaigns and deploying them in new ways?as long as teams can activate the data at their fingertips.

In an environment where people are more ad-sensitive and ad-blind than ever, we will see even more focus on data-centric campaigns that don't just offer products, but offer experiences.

The Ad-Tech Renaissance

Good ads today need to be more than ads. They need to be memorable experiences that offer something that reminds, engages or inspires the shopper. It's a full funnel journey that tracks across the awareness and consideration phases down to conversion. At each touchpoint, every consumer experience has to be individualized and relevant, otherwise your campaigns go unnoticed and impatient shoppers will go onto the next thing.

Intelligent ads are going to pop up in messengers, chatbots, and, of course, across the smart home. But to actually work, every ad-tech campaign is still going to have to start with the same thing: a good ad.

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