It was inevitable. Digital marketing growth is slowing down, and its share of total ad spend is approaching its plateau.
That’s one of the insights in GroupM’s latest media expenditure forecast, This Year, Next Year. The forecast anticipates global ad spend to keep growing through the rest of 2019 and into 2020.
I asked Brian Wieser, GroupM global president of business intelligence, to take us deeper into some of the report’s findings.
Paul Talbot: The report mentions that outdoor and radio “retain unique characteristics for reaching audiences and don’t face direct alternatives in the ways that TV and print do.” How will this impact ad spend in each?
Brian Wieser: The unique characteristics of these media make it possible for them to avoid declining. People will continue to drive in cars with pre-installed audio devices for a very long time. People will continue to look around their environments and see commercial signage. Consequently, advertisers will continue to use these media.
Talbot: You forecast increased political spending in the U.S. from 2018. What light can you shed on where this spending will grow?
Wieser: Digital advertising probably outpaces all other media for political ad spending. Many political candidates and issues advertisers have historically skewed their spending towards local television, but increasingly have found political advertising effective for more than fundraising and want to use it to reach voters.
Talbot: Because of Russian manipulation, is Facebook “damaged goods” for political advertisers in 2020?
Wieser: No. As we’ve seen since news of electoral interference on Facebook, US politicians and interest groups continue to use the platform, and there’s no reason to believe it won’t continue.
Talbot: Do you see local TV news inventory losing any of its luster for political advertising? What should we anticipate in terms of media allocation shifts for political campaigns?
Wieser: No. Local TV is still one of the most – if not the most – impactful ways to reach likely voters, and local news generally reaches large numbers of those voters. The shift of budget shares to digital is happening only because political advertisers have historically underweighted digital spending.
Talbot: The shift away from large brands to smaller, “web endemic” brands. What’s the significance of this?
Wieser: Web endemic brands will have a different mix of media spending – digital first, and digital heavy – relative to brands which are not endemic to digital environments. This has contributed to the outperformance of growth of digital advertising in recent years.
It’s worth noting that many of these web endemics are massive. A small group of companies – Google, Amazon, Facebook, Netflix, Uber, Booking, IAC and Ebay – accounted for $26bn in paid advertising spending globally last year.
Talbot: What has been the long-term trend of the impact of the Olympics? Do the games deliver the impact and the audiences they did in the analog age?
Wieser: It’s not 100% clear what impact the Olympics has on total advertising. It should cause some incremental growth because many advertisers budget for the Olympics on a multi-year basis, often funding it from corporate rather than marketing budgets.
But it doesn’t always show up in the data as a “bump” in overall growth, so it may be that advertisers who sponsor the Olympics are really just reallocating resources.
The impact is still significant for advertisers as audiences continue to consume Olympic content in massive quantities.
Talbot: What struck you as particularly significant when you were reviewing your work and putting the finishing touches on the forecast?
Wieser: The skew of U.S. political advertising alone, not other “quadrennial events” on global figures, was probably the most notable standout.