Interpublic Group’s Magna expects global advertising to grow at 3.7% and reach $511 billion this year. Digital ad sales will experience double-digit growth and be the top media category in 2017. Within digital advertising, search and social video are expected to soar, MediaPost reports.
Double-digit growth in digital advertising will be propelled by social and search ad sales. Search and social accounted for an astounding 95% of digital dollar growth last year, or $10.5 out of $11 billion total net growth. Digital ad spend will approach 40% of total spend in 2017, and is projected to reach 50% by 2021. Last year, total advertising sales in the US grew 6.6% to reach $180 billion.
Social video ad spend is expected to double once more in 2017 to over $4 billion dollars. This would account for a third of US digital video ad sales, and 20% of social media ad sales. New video ad formats, such as mid-roll ads in live video, and the emergence of social video on over-the-top platforms on connected TV will accelerate growth. Linear TV ad sales, on the other hand, will remain flat, with higher pricing offsetting declines in audiences.
Viewability across digital video ads is also improving, according to Integral Ad Science. The company sampled over 6 billion video impressions across direct and programmatic channels for its latest report, and viewability was found to have improved from 40% to 58.2% in the first half of 2016 compared to the time same period in the 2015, while completion rates rose 26.7% to 35.1%. At least 50% of the pixels should play on-screen for at least 2 seconds to count a video view.
There’s no question that consumers are increasing the amount of time they spend consuming digital media, while advertisers are increasing their ad budgets into digital channels. What may come as a surprise, however, is the complexity of the interconnected web of companies involved in the process of delivering digital advertisements to end users. Collectively, these companies are known as “advertising technology,” or “ad tech” for short.
Ad tech companies are intermediaries between advertisers and publishers, and add value to the ad delivery process by consolidating inventory, automating workflows, and offering precise targeting capabilities at scale. The automation of ad buying is also known as “programmatic advertising” — that is, using technology and software to buy digital ads. Programmatic ad spend in the US is quickly ramping up: It will top $20 billion this year and reach $38.5 billion by year-end 2020.
But ad tech’s ascendancy isn’t without its drawbacks. The advertising industry in the US is dominated by two main players: Facebook and Google. As a result, ad tech players are fighting for a pretty small piece of revenue pie, one of the many drivers of increased consolidation in the space.
Kevin Gallagher, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on ad tech that examines the different players involved in the process of delivering ads, the formats that are driving growth (notably mobile and video), and the factors that are driving increased consolidation over the coming years.
Here are some key points from the report:
- By 2020, mobile will be the biggest online advertising market, and video the fastest growing.
- So-called “walled gardens” Google and Facebook lead a relatively small group of players that attract the vast majority of digital-ad spending in the US today.
- Growth can be challenging for players outside the walled-garden duopoly, and many companies are reaching a level of maturity that may prompt investors to push for an exit.
- Ad tech is poised for consolidation, and the number of companies in the industry will decline significantly over the next few years.
- Companies specializing in certain ad formats like mobile, video, and TV are attractive targets. They are well positioned to take advantage of the fastest growing segments of digital media.
In full, the report:
- Forecasts US programmatic revenue through 2020.
- Highlights the factors driving consolidation, and identifies new acquirers and attractive targets.
- Explores the challenges ad tech companies face including the dominance of walled gardens, ad blocking and measurement.
- Outlines emerging technologies that will help propel ad growth in the next decade.
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