Google and Facebook will account for 84 percent of digital advertising investment in 2017, with Amazon also rapidly increasing its stake in the ad world, according to a report from GroupM. GroupM’s global ad investment forecast released today predicts healthy growth in ad investment of 3.1 percent this year and 4.3 percent next year, but that these ad dollars will increasingly be concentrated in the large digital companies.
Both Google and Facebook posted strong results for Q3 this year, with Google making $24bn in ad revenue and Facebook reporting $10bn. GroupM predicts that these two alone will account for 84 percent of all digital investment in 2017 (excluding China), and will be responsible for 186 percent of digital growth. Amazon’s ad income is also expected to continue its current rapid growth. While Amazon doesn’t specify its exact ad income in its financial reports, GroupM says it conservatively estimates that Amazon’s on-platform search and display advertising combined with its off-platform ads will have draw in revenue in the low single-digit billions. Amazon has established itself strongly in India in particular, where it is the second largest advertiser behind rival e-commerce company Flipkart.
The report calls this consolidation of digital ad investment within a few dominant players “exceedingly bad news for the balance of the digital publisher ecosystem”. It is nonetheless helping drive the strong growth of digital ad investment across the globe. GroupM expects digital investment growth to be 11.5 percent this year and 11.3 percent next year, increasing to equal 36.4 percent of all ad investment by the end of 2018. These figures might underestimate the level of investment in digital advertising too, as investment in data and tech are not counted due to what GroupM describes as the “now antiquated concept of working media investment”.
Next year is expected to be a landmark year for digital as investment is expected to overtake traditional TV spend in 17 markets, including China, France, Germany and the UK. Programmatic spending is also expected to rise alongside digital, though the forecast says that analysis of the US suggests it’s not growing as fast as expected. The familiar concerns over programmatic buying are suggested as the cause of this, including viewability and brand safety issues and the murkiness of the programmatic supply chain.
TV meanwhile is faring less well, with investment growth expected to reach 0.4 percent this year and 2.2 percent next year. GroupM however says these figures are made to look worse by China’s low TV spend caused by the country’s heavily regulated TV industry; if China is discounted, growth is forecast to be 3 percent this year and 4 percent next, maintaining a stable share of ad spend at 41 percent.
Overall, while global GDP growth and rising consumer demand are helping to keep ad spending high, GroupM sees economic challenges on the horizon. “Brands are operating in hyper-competitive and low growth markets, challenged to deliver in the near-term,” said GroupM CEO Kelly Clark. “Global 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 platform.”