Predicted: Digital Ad Spend to Reach $253bn by 2018
IBIS Capital cites big AdTech trends and predictions for 2016 in global AdTech investment review.
Media and tech investment and advisory firm IBIS Capital has released its predictions for the biggest trends set to impact the AdTech industry in 2016 and beyond. With a greater emphasis on mobile adoption and spend, AdTech acceleration in emerging markets and the emergence of cross-screen video advertising topping the list of expectations for the year.
The market for digital advertising remains one of the highest growth opportunities, particularly in mobile and emerging markets, with spending forecast to more than double to nearly $253bn from 2013 to 2018. By 2018, mobile online spend is forecast to be 40% of total advertising spend and nearly two thirds of total digital ad spend, up from just 16% in 2013. The US is leading the global digital AdTech market; North America mobile generated revenue per user reached $60.1 in 2015 and is set to increase to $70.6 by 2017, followed by Europe, Middle East and Africa with a joint $9.5 spend last year, Asia Pacific ($5.2) and Latin America ($1.0).
The report from IBIS Capital found that global digital media consumption surpasses traditional channels and is expected to double by 2018, driven mostly by mobile. Smartphone penetration is greater than any other device and is increasingly impacting purchase decisions – with the average mobile web user consuming six hours of media on average via their phones per day, and digital advertising representing 90% of all digital media interactions. Not only have smartphones and tablets overtaken PCs, but mobile overtook TV and online in impacting purchase decisions in 2014. According to the report, by 2017, there will be 5bn mobile users and relevant spend is set to reach $134bn globally, with the increase in digital ad spend being driven by mobile, digital video, cross-screen advertising and programmatic buying targeting specific sectors or audience groups.
“We live in a mobile, data-driven world – a world where some 7.9 zetabytes of digital content were produced last year and 60% of global web users now use mobile as either their primary or exclusive means of going online”, said Charles McIntyre, CEO, IBIS Capital (pictured top left). “With a $171bn total in digital AdTech spend in 2015 alone, it’s becoming clear that the rapid growth in mobile device adoption is set to explode in the years to come. This acceleration will drive strong mobile spend and acceleration in emerging markets, where mobile revenue per user is expected to grow at almost twice the rate as in developed countries by 2017.”
The investment review indicates a number of key trends, which double-up as growth opportunities for organisations. One of the main trends will continue to be programmatic and real-time bidding (RTB), which are estimated to grow at a 25% and 48% CAGR respectively through 2017; the importance of programmatic is highlighted by the prediction that only 17% of display based advertising is expected to be non-programmatic by 2017 vs. 47% in 2013.
According to the report, consumers spend 4.4hrs of leisure time daily in front of screens, including digital TV, smartphone and tablets. As a result, the report predicts that global online video ad spend is expected to increase from $11bn in 2014 to $26bn in 2018, with advertisers shifting to programmatic buying to optimize media spend.
As such, global online video ad spend is expected to increase from $11bn in 2014 to $26bn in 2018.
The penetration of new video-capable devices and increased popularity of video streaming services are leading viewership away from linear television. This shift is leading the cross-screen advertising and compatibility trend to emerge as a key driver for the next few years, especially following a 229% increase in conversions from cross-screen re-targeting in 2014. The number of screens per user is projected to hit 4.3 by 2020 (1.97 in 2000), which provides opportunity for impressions to be retargeted across screens based upon shared information by retargeting technology providers. The report further highlights that gradually, more ad networks are integrating white label payment widgets that provide cross-platform, multi geographic coverage in order to offer consumers a seamless micro transaction process and a customized call to action regardless of which device they’re on. A key focus will be disrupting the mobile operator payment method and providing flexible embedded payment flow for maximum as global mobile payment revenues are projected to reach $3tn by 2019.
The review from IBIS Capital also states that with the anticipated growth AdTech investment there will also be barriers, mostly due to the nature of the complex ecosystem itself. Competition will intensify to capture growth and the paradigm will shift towards implementing a blended business model and low barriers to entry. Today’s fragmented ecosystem is driving the convergence of mobile, video, social and big data analytics, when at the same time many businesses are yet to establish a direct line of communication between buyers, sellers and work towards closing the customer feedback loop.
Charles McIntyre explains, “Building an innovative business model with monetization opportunities in different areas of the value chain needs to be a key priority for all organisations in the upcoming year. A strategy that offers vertical consolidation play for future proofing through sustainability is essential; this can be achieved by identifying these vertical opportunities, such as hyperlocal programmatic mobile advertising, cross-screen advertising and retargeting technologies”.
The report notes the need for customer relationship management systems with valuable social data on target audiences that advertisers can use to develop and provide successful marketing campaigns, which may drive further acquisitions and partnerships. Programmatic marketing platforms that provide advanced methods to optimize and measure the return on investment for advertisers are likely to attract increased attention as well.
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