Digital advertising to surpass print, TV for the first time, report says
Digital advertising to surpass print, TV for the first
time, report says
By Hamza Shaban, The Washington Post 9:12 am CST,
Wednesday, February 20, 2019
This year, the money spent on digital advertising in the
United States will surpass that on traditional ads for the first time,
according to forecasts by eMarketer, representing a landmark inversion of how
advertisers budget their resources and highlighting the rise of digital media
as platforms to seek consumers' attention.
By the end of the year, eMarketer expects companies to
spend nearly $130 billion on digital ads, compared with about $110 billion on
traditional advertisements, or about 54.2 percent of the ad market vs. 46.8
percent, respectively. According to the research firm's projections, spending
on digital ads will continue to outpace that of traditional ads. By 2023,
digital ads will capture more than two-thirds of all ad spending, according to
the estimates.
The increase in digital ad dollars will come, in part,
from sharp declines in key print ad formats including directories such as the
Yellow Pages, whose ad spending will fall by 19 percent, and the print versions
of newspapers and magazines where ad spending is expected to decrease by about
18 percent, eMarketer said. Ad spending on TV will decline 2.2 percent this
year, to about $71 billion, eMarketer said, owing largely to the absence of
elections and big sports events, such as the Olympics or World Cup.
"The steady shift of consumer attention to digital
platforms has hit an inflection point with advertisers, forcing them to now
turn to digital to seek the incremental gains in reach and revenue which are
disappearing in traditional media advertising," eMarketer's forecasting
director Monica Peart said in a statement.
The top two digital advertisers in the United States -
Google and Facebook - are expected to maintain their dominant hold on ad
dollars, as the tech giants' combined ad revenue will command about 59 percent
of the market, according to the forecasts. EMarketer projects Google's share
will drop slightly from 38.2 percent to 37.2 percent; Facebook's share is
expected to remain "virtually unchanged" rising by less than half of
a percentage point from 21.8 percent to 22.1 percent this year.
While Facebook has been rocked by scandals, and is
negotiating with the Federal Trade Commission over a multibillion dollar fine
tied to its privacy practices, the company's market share increase will be
driven by Instagram, eMarketer said. "There's strong demand for ads in Instagram
Stories, and Instagram still benefits from the perception that it's less
impacted by the challenges core Facebook has faced," eMarketer analyst
Debra Aho Williamson said in a statement.
Amazon, Microsoft and Verizon round out the top five
digital advertisers, and the latter two are expected to lose ground in ad
spending.
Amazon's advertising business, the third largest in the
United States, is projected to grow by more than 50 percent in 2019, claiming a
total of nearly 9 percent of the digital ad market.
"The platform is rich with shoppers' behavioral data
for targeting and provides access to purchase data in real-time," said
Peart. "This type of access was once only available through the retail
partner, to share at their discretion. But with Amazon's suite of sponsored
ads, marketers have unprecedented access to the 'shelves' where consumers are
shopping."
Last week, Amazon canceled its plans to build a second
headquarters in New York City after the company was met with resistance from
local politicians, unions and community activists who criticized the project as
an unfair deal. Opponents of the plan highlighted their concerns of the rising
cost of living, deteriorating infrastructure, and the preferential treatment
given to corporations such as Amazon, which is valued at nearly $800 billion
and extracted almost $3 billion in tax subsidies for the planned expansion.
EMarketer said it has adjusted its projections higher for
Amazon following the company's latest earnings report, "putting it on
track to close the gap with No. 2 Facebook" in the digital ad market.
More than two-thirds of spending on digital ads this year
will be dedicated to ads on mobile devices, eMarketer said, totaling more than
$87 billion.
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