Digital spends to overtake TV in 2018: DAN Report

Dentsu Aegis Network has come out with its latest Ad Spends Forecast 2018 report, based on data received from 59 markets, it pegs global ad spends growth at 3.6 percent in 2018, up from 3.1 percent in 2017.

The Ad Spends Forecast 2018 shows that Asia Pacific ad spend growth is forecast to accelerate to +4.2 percent in 2018, up from +3.5 percent in 2017. The region is forecast to be the leading contributor to global ad spend growth in 2018, contributing 39.7%, US$8.1 billion of the total US$20.3 billion incremental global increase, led by markets China, Japan, India and the Philippines.

Events that will play an important role in 2018- Winter Olympics, Commonwealth Games, Asian games and state elections are all expected to stimulate ad spend growth. However, a slowing of growth in markets like Australia and China can be attributed to multiple contributing factors such as a naturally maturing market, ad fraud and data accuracy issues on top of a general economic slowdown.

The Ad Spends Forecast 2018 further highlighted that digital media channels will continue to disrupt ad spends in 2018, growing globally by 12.6 percent in 2018, versus 15 percent in 2017, to reach US$220.3 billion. Below are some interesting insights from the report on digital trends. 

Mobile will go from strength to strength, reaching US$121.1 billion having overtaken desktop as a share of total digital spend in 2017. Desktop will continue to lose global share (-1.5 percent since 2016), versus mobile’s gains (8.2 percent since 2016)

Digital overtakes TV, by a margin now exceeding previous forecasts. Digital ad spend will account for 38.3 per cent share of total ad spend, TV at 35.5 per cent.

Paid search accounts for the lion’s share (40 percent) of digital ad spend, with voice-activated devices helping to power its growth. Amazon's Alexa app was the top app for Android and iPhone on Christmas Day 2017, with the company claiming its devices enjoyed the best holiday season yet

Programmatic spend will rise by 23 per cent as established players and startups compete over ad tech.

Within display, video ad spend is the fastest growing at 24.5 percent in 2018 driven by mobile-video
as consumers watch more and more video content on their small screens.

Engaging online video formats and social (23.5 percent in 2018) are growing rapidly, while traditional display banner formats are forecast to grow at more subdued single digit rates—a predicted 8.7 percent in 2018.

Mobile ad spend overtook desktop in 2017 as previously predicted with a 57 per cent share of total digital spend versus desktop at 43 per cent. Mobile spend is forecast to increase by a further 23.8 per cent in 2018 to reach US$121.1million, a significant 62 percent share of digital spend in 2018.

Speaking on the Indian context, Kartik Iyer, President Media Brands and Amplifi – Dentsu Aegis Network India said, "India is forecast to grow by 12.5 percent in 2018, up from 9.6 percent in 2017, reflecting its solid economic growth trajectory. Digital media spend is forecast to increase by 30 percent in 2018 with 43.6 percent growth in mobile spend, which will account for 47 percent of total digital spend in 2018. The advertising market in India is forecast to grow by a further 12.5 percent in 2019. 2018 is expected to be a growth year considering the stabilization post GST. Another driver of growth would be the fiscal policies of the government which are expected to be pro spending and supporting the middle income groups. In India, the significant improvement in availability of high-speed networks at a lower cost is making a huge impact in the efficiency metrics of digital media. This will continue and therefore will support the faster growth of Digital advertising. As marketers, we need to be prepared to harness this change and maximise engagement with our customer and thereby deliver higher returns for our brands. As an agency group, DAN has over-invested in this area and today has the largest, most experienced group of companies which are harnessing this rapidly changing area.”

Commenting on the latest forecasts, Nick Waters, CEO of Dentsu Aegis Network Asia Pacific, pointed out, "Asia Pacific continues to lead the growth in digital ad spend. With the region’s fast adoption of technology and innovation, there will be a substantial shift towards mobile and smart devices. As a result, mobile online video ads will be the main drivers of growth within digital ad spend across the region.”

Waters added, “Data continues to be central to our business in Asia Pacific and with better understanding of new technologies, structures and models for business growth, agencies must help brands move from being disrupted to disruptor.”

Jerry Buhlmann, CEO of Dentsu Aegis Network, said, "The latest ad spend forecast shows a market in transformation, but not recession. The challenge for brands is to navigate an uneven economic outlook alongside a rapidly evolving tech & innovation landscape. In many markets, disruptive innovation - from mobile, voice activation and new ad tech players – is still providing new sources of growth and we forecast this trend will continue into 2018.”