Digital investment will exceed traditional TV in seventeen markets by 2018

GroupM revealed today ad growth predictions for 2018 and Digital investment growth is expected at 11.5% in 2017 and 11.3% next year; its share will increase from 34.1% this year to 36.4% in 2018. Excluding China, digital’s growth is moderated a bit: 10.6% (2017) and 10.5% (2018). GroupM believes digital investment will exceed traditional TV in seventeen markets by year’s end: Australia, Canada, Denmark, China, Finland, France, Hong Kong, Ireland, Hungary, Germany, The Netherlands, New Zealand, Norway, Sweden, Switzerland, Taiwan, and the U.K. On analysis of real investment dollar trends, GroupM disagrees that digital has already surpassed TV in the U.S. (per other industry sources); these lines are expected to cross in 2020.

At close of the third quarter, Google reported ad revenues of $24B and Facebook reported $10B. With GroupM’s study of total worldwide digital investment and prior disclosures from these companies, GroupM believes these two companies will account for 84% of all digital investment in 2017 (ex-China). GroupM also believes the two will account for 186% of digital growth in 2017. This is exceedingly bad news for the balance of the digital publisher ecosystem. Amazon is on a fast-track to figure more prominently in the consolidation of digital ad investment with a few dominant players. Conservatively, GroupM believes the sum of Amazon’s on-platform search and display advertising combined with their off-platform advertising revenues is in the low single-digit billions.

As digital continues growing, programmatic buying is expected to grow with it. However, in GroupM’s analysis of the U.S., specifically, programmatic budgets are estimated at 20% of digital spending (excluding social platforms) and have not increased as quickly as expected. GroupM believes concerns over supply chain integrity and brand safety are to blame. While GroupM insists on viewability and brand safety measurement by 3rd parties, some programmatic partners do not support ad call prevention to protect against violent, sexually suggestive, or politically extreme content including fake news. GroupM reports that many clients have moved to whitelist-only approaches to increase safety but this does limit reach and increase prices. Advertisers are rightfully concerned over the murkiness of the programmatic supply. GroupM supports marketplace adoption of “Ads.txt,” a method publishers and exchanges can use to publicly declare the companies that are authorized to sell inventory from specific publishers; this will give advertisers and agencies the ability to buy direct and eliminate interloping middlemen and their associated fees.

As consumer attention continues fragmenting across platforms, many see virtue in one of the oldest advertising media, Out-of-Home, which is also becoming more data-informed, digital and versatile. The combination of location data with purchase, social media and viewing behavior presents an increasingly compelling proposition. It is growing share, from 6.1% in 2016 to 6.2% in 2017 and 6.3% in 2018 – the highest it has been since 1993. Apart from digital, it is the only medium growing share. Radio is almost holding onto its share (4.4% this year, 4.3% next) as it is less disrupted and innovates with content and social media.

“2017 is a challenging year. Brands are operating in hyper-competitive and low growth markets, challenged to deliver in the near-term. Legacy media continue to be challenged by audience fragmentation and competition from the dominant digital players, and those giants have grappled with their own far-reaching success as consumers misuse their user-generated platforms,” said Kelly Clark. “Sitting between strained clients and stressed media partners, agencies understandably also saw challenges in 2017, but it would have been much worse for our clients had they not had us to help navigate marketplace dynamics. We believe marketers have an enduring need for objective partners who can operate across the whole media landscape to develop the most integrated campaigns, as well as to help shape standards, measurement and integrity.”