If you aren’t currently investing in digital advertising, you may want to reconsider. In 2017, eMarketer estimates that 40.5% ($205.06 billion) of the total media ad spending will have gone to digital.¹ By 2021, they estimate that digital will account for over half of all US ad dollars!
Source: eMarketer, September 2017
In the six year span pictured, it is clear that we have been experiencing a massive shift in how people are consuming media. This has caused ad budgets to steadily shift as well. Did you know that digital ad spending surpassed tv ad spending for the first time in 2016? Advertisers are moving money away from traditional media advertising, and as a result, the percentage of digital’s ad share is increasing.
The reason that digital media spending will continue to rise, experiencing double-digit growth each year for the next four years at least, is largely due to the ever-improving technology available and digital’s susceptibility to measurable data and results.
Breaking Down Digital
In advertising, digital includes many different types of media, such as mobile ads, display ads, search ads, programmatic spotify/pandora, etc. Let’s take a look at a few of those and break down how much of digital ad spending they account for.
Advertisers have been contributing more ad dollars to mobile as consumers become increasingly glued to their devices. In fact, since mobile is responsible for over 70% of digital ad spending, it has been the main cause of digital’s growth in 2017. This year, mobile ad spending will be greater than the combined ad spending of directories, out-of-home, radio, magazines, and newspapers. Its spending will have climbed 25% and is expected to reach $58.38 billion (28.5% of all media ad spending); it will likely surpass television’s share of media spending by 2019. By 2021 mobile’s share of digital advertising will hit nearly 80%, and it will account for 39.5% of all ad dollars in the US, largely due to mobile programmatic ads and the number of people who watch videos on their mobile devices.
Display has consistently been the most popular digital ad format in 2016 and 2017. In 2017, display advertising will have made up over 50% of digital ad spending (over $16 billion) for the first time, this includes banner ads, video, rich media, native ads, and social media. Growing at a rate of over 28%, rich media is the fastest growing type of display ad this year (its spending is expected to double by 2021), followed by video at over 23%. Over $30 billion will have been invested in mobile display ads this year, growing at a rate of over 26%. That means that almost three quarters of display ad dollars will have gone to mobile formats in 2017.
Search will rake in over $36 billion by the end of the year, making it responsible for 44% of digital’s total ad spending. Mobile search ads have played a huge role in search, as desktop search declines slowly over a period of years. Search is forecasted to grow at a rate of over 10% each year through 2021, eventually totaling over $56 billion.
A Look at Traditional Media Formats
While TV ad spending did grow 3.5% in 2016, digital still surpassed it for the first time by over $300 million. This trend is going to continue as digital is on track to surpass TV by around $10 billion in 2017, spending a little over $72 billion. TV ad spending will continue to slowly increase through 2021, but it’s slow increase will lead to mobile ad spending alone surpassing it by 2019. By 2021, TV’s share of ad spending will account for less than one third of total ad spending. Many advertisers are shifting their TV budgets towards digital and mobile formats.
Like TV, many advertisers are also shifting their print budgets to digital and mobile formats. The print category in the line chart above is composed of magazines and newspapers. Print has been losing steam year by year as digital media replaces it, declining nearly 5% between 2016 and 2021. In 2017, magazine ad spending will decrease 2%, and newspaper ad spending will decrease 5%. Total, print ads will account for just over 12% of media ad spending this year. Newspaper advertising’s downward trajectory is the most extreme of any other ad format, however, spend on digital newspaper ads will increase. Magazine advertising does have a slightly brighter future than newspapers, but it is only expected to increase 0.5% this year.
In eMarketer’s research, “radio” only refers to over-the-air radio and excludes off-air radio and digital radio. This year, over-the-air radio ad spending (excluding digital advertising) is expected to spend 0.2% more than 2016. It’s spending will remain fairly consistent throughout 2021, reaching $14.21 billion in 2017. Digital radio is expected to increase faster than traditional radio, but its total spending will be small compared to over-the-air radio at $3.5 billion. If you group both over-the-air and digital radio, its ad spending will be consistent through 2021 because of programmatic advertising.
Out-of-home media is advertising that reaches the consumers while they are outside their homes, such as billboards and movie ads. Out-of-home advertising is not as affected by the adoption of digital advertising and will see an increase of 2% in 2017, largely due to the growing popularity of digital billboards. It will see a small gradual increase over the next few years, increasing around $500 million by 2021.
Directory advertising, which is advertising that appears in a specific type of directory such as an ad in the yellow pages' directory, has the smallest percentage of media ad spending of all of the different types of media. It’s ad spend will continue on a downward trajectory through 2021.
Overall, it is clear that digital is on the rise and isn’t going anywhere anytime soon. Understanding the trends in total media ad spending by media can help us make better informed marketing decisions, help us allocate our marketing budgets to the channels that will drive the best results, and help us become better marketers overall.
¹:The chart pictured in this article shows the total U.S. ad media share broken down by type of media from 2016 to 2021 per eMarketer as of September 2017. All of the numbers included in this article are from eMarketer’s March 2017 report. The eMarketer reports are made up of forecasts and estimates that they have described as being “based on an analysis of quantitative and qualitative data from research firms, government agencies, media firms and public companies, plus interviews with top executives at publishers, ad buyers, and agencies.”