The rising stars of digital ad spend: video, social and programmatic
15 Jun 2017
Digital ad spend is growing rapidly and is set to overtake television in 2018 as a share of global ad spend, according to Dentsu Aegis Network’s latest forecasts. But within digital, there are a number of new trends and innovations that are helping to drive growth and value for brands. Online video, social and programmatic in particular are helping companies engage more effectively with consumers. As with many innovations, however, they also present challenges that must be overcome in order to realise their full potential.
1. Online video
Online Video is the highest growing sub-category within digital and according to our forecasts is predicted to grow by 32.4% in 2017 and 25.4% in 2018. This rapid increase is driven largely by the popularity of on-demand Television platforms such as Netflix and YouTube, as well as Social Video applications like Facebook’s native video formats—which are especially popular among millennials. Online video provides advertisers with a strong level of engagement and has the ability to add incremental coverage to TV campaigns. While Video represents a relatively small 4.6% of total ad spend in 2017 (this total excludes a few markets where digital spend has not been broken out), its investments are rapidly growing and it is forecast to match Magazine’s 5.6% share of spend in 2018.
Social is a significant growth area in the digital economy with a forecast growth rate of 28.9% in 2017 and 23.1% in 2018. This is largely driven by Mobile-Social spend (which is forecast to increase by 47.5% in 2017 and a further 34.4% in 2018) and Social-Video spend. Growth is still fundamentally driven by Facebook, however, Snap (the parent company of Snapchat) recently IPO’d. Valued at around US$25 billion, it is hot on the heels of Facebook and is now the second most valuable social platform.
In 2017 we expect Programmatic (i.e. automated)ad spend to grow by 25.4% and 22.4% in 2018. TV is starting to explore and experiment with this way of buying however for the moment this is still in its infancy. Offline programmatic will remain one of the hot topics in 2017. Core to programmatic spend growth remains the availability of robust data, available inventory/formats and transparency about site and ad placement.
Safeguarding future growth
Since late 2016, the challenges of programmatic advertising have drawn increased attention. While brand safety, ad fraud, viewability and measurement are by no means new issues, several high profile incidents and subsequent media reporting have brought them into finer public focus. Many of the major platform owners have announced additional measures to tackle the respective issues that have faced their platforms, however there is more work to be done to reassure advertisers.
To ensure the long-term growth of programmatic, social and online video, advertisers need to feel confident that their brands will appear in brand safety environments; measurement of their activity is accurate; real people, not bots are viewing their ads and videos; and that the online environments on which they advertise meet their own organisational values.
Click here to download our latest DAN Ad Spend report.