Within the next two years, one-third of all global ad expenditure growth will driven by upticks to paid search and social media budgets, according to Zenith’s most recent forecast.
By the time this year is out, annual global ad expenditure will have hit $581bn; a figure that’s set to increase by a further 4.2% come 2020.
67% of this 2020 growth will come from brands investing in paid search and social media ads.
Over that same timeframe, Zenith’s Advertising Expenditure Forecast estimates that paid search will grow by $22bn to reach $109bn. Social media budgets, meanwhile, will increase by $28bn to hit $76bn – making the latter the biggest single contributor to growth by 2020.
Players like Google, and indeed Amazon (to which brands like L’Oréal and Pernod Ricard have been shifting search spend) will benefit from the forecast substantial increase paid search budgets.
Buoyed by the streamlined ways of creating search ads and better integration with e-commerce platforms, Zenith believes the medium is attracting a bigger slice of brands’ performance budgets.
One thing limiting the potential of paid search in the short term though, said the report, was a lack of paid search opportunities on smart assistants like Amazon Alexa or the Google Home; devices that are increasingly finding their way into consumers' homes.
While advertisers like Virgin are experimenting with voice to see where it fits into marketing strategies, so far there's been little opportunity for direct marketing through intelligent home or smartphone assistants. When users make a voice search on a smart speaker, they will normally only be presented with the first organic result.
So for now, brands are focused on their voice SEO strategies and organic content. 'We expect the search platforms will eventually make paid search work with voice assistants, said Zenith, which in the short-term is 'limiting the growth potential of paid search'.
“Better use of AI and integration with retail is driving continued strong growth in paid search,” Jonathan Barnard, Zenith’s head of forecasting and director of global intelligence.
“As voice search becomes more important, though, brands will need to focus more on content and SEO to secure first-place organic results for their most important keywords.”
Social's dominance over growth comes in spite of the headlines from brands like Unilever and P&G that they will pull spend from platforms over measurement and ad fraud issues.
Video is fueling social's growth and while social video ad have so far acted more as complements to TV spots rather than competitors, the platforms are now competing with television more directly through the likes of Facebook Watch and IGTV.
Overall Zenith expects social media ad spend to grow by an average of 16% a year to 2020 – twice the rate of its nearest growth competitor paid search.
The bigger picture
Between 2017 and 2020 it's forecast that global ad expenditure will increase by $75bn in total.
The US will contribute 26% of this extra ad expenditure at $19bn and China will contribute 22%, followed by India (5%) and Indonesia (4%).
Despite the political and economic uncertainties of Brexit the UK will remain in the top ten markets comes 2020, contributing $1.8bn in growth. It has 'held up' better than expected so far in 2018 with 2.4% growth forecast for 2018 as a whole.
In 2017 internet advertising overtook advertising on traditional television to become the world’s biggest advertising medium, accounting for 37.7% of total ad expenditure.
As internet advertising matures, its growth is slowing down, but it remains the fastest growing medium by some distance. Internet ad spend grew 15% year-on-year in 2017, and Zenith forecasts an average growth rate of 10% per-year between 2017 and 2020. By 2020 it expects internet advertising to account for 44.9% of global spend.