Online Advertising (Global Market)

2023: Global online advertising market growth by 8% to $804.8 billion

In 2023, Internet advertising costs globally reached $804.8 billion. For comparison, a year earlier, expenses in the relevant area were estimated at $745.2 billion. Thus, growth was recorded at 8%, as stated in the Market Research Future study, the results of which are presented in early December 2024.

The market in question is showing steady positive dynamics. One of the drivers of the industry is the growing distribution of smartphones and tablets. By increasing the number of users spending a significant amount of time on digital platforms such as social media, search engines, mobile apps and websites, advertisers are gaining additional opportunities to reach the target audience. These Internet platforms offer a variety of ad formats and targeting options, allowing advertisers to optimize their marketing campaigns for demographics, interests, behavior, and user location. At the same time, the interactive nature of web platforms helps companies interact with consumers in real time, which ensures a higher level of engagement.

Another stimulating factor is the rapid development of artificial intelligence and machine learning. Such tools provide accurate targeting and flexibility in terms of personalization. In addition, AI algorithms are able to analyze huge amounts of information, revealing market trends and changing consumer preferences. The development of cellular networks and the increasing use of mobile Internet also contribute to the growth of the advertising market. For example, faster speeds and less latency in 5G networks improve the delivery and quality of Digital Signages.

At the same time, analysts call a number of restraining factors. These include:

• Increasing use of ad blocking software;
• Advertising fraud;
• Economic instability, provoking cuts in advertising budgets;
• Requirements for confidentiality of user data;
• Reduced consumer engagement due to high ad intensity.

The leader in the global online advertising market is Google Corporation with a share of about 39% in total revenue at the end of 2023. In second place with 18% is Facebook (owned by Meta, which is recognized as an extremist organization; activities on the territory of the Russian Federation are prohibited). Closes the top three Amazon, whose share is estimated at 7%. This is followed by TikTok and Baidu with 3% and 2%, respectively.

Geographically, the leader is North America where advertising costs on the Internet in 2023 reached $341.3 billion. The dominance of the region is due to the high concentration of large web platforms, the technologically advanced consumer base and the wide penetration of the Internet as a whole. In second place is the Europe Asia-Pacific region, which demonstrates the fastest expansion rates, and closes the top three. It is noted that the growth of Internet use in developing countries opens up new opportunities for the Digital Signage segment.

Market Research Future analysts believe that in the future, the CAGR in the market under consideration will be 8%. Thus, by 2032, the cost of online advertising on a global scale, according to the estimates presented, could reach $1.49 trillion.^[1]

2020: Google and Facebook forced to share advertising revenue with content providers

On April 20, 2020, it became known about the decision of the Australian authorities to oblige Facebook and Google to share advertising revenue with local media. This country was one of the first to oblige digital platforms to pay for the content they use.

The mechanism for collecting deductions was developed by the Australian Competition and Consumer Protection Commission (ACCC): a code of conduct has been created that introduces rules obliging Facebook, Google and other companies to make deductions in favor of members of the press if they use their content.

Australian authorities decide to force Google and Facebook to share revenue

It is assumed that the code will regulate the field of data exchange, the conditions for moderating news and the formation of ratings, as well as the procedure for monetization and sharing of income received from the publication of news. In addition, it will establish mechanisms for resolving disputes between market entities and provide penalties for non-fulfillment of contracts.

Australian Chief Treasurer Josh Frydenberg said the government took this step after unsuccessful negotiations with Facebook and Google on content payment and ad control rules. The Treasury has a difficult struggle with large companies, but since a lot is at stake, the government is ready for this struggle, he stressed.

On the fundamental issue of payment for content, which could be solved with the help of the development of a voluntary code, no significant progress was made, - the   official was quoted as saying by Reuters by a comment given to one of the Australian media.

By April 2020, the Australian authorities did not name the share in advertising revenue that Internet companies will have to give to the media for using their content.^[2]

The volume of the Australian online advertising market in 2019 amounted to about 9 billion Australian dollars (about $5.72 billion), an increase of more than 8 times compared to 2005.

2019: Rise in online advertising to $332 billion

2017: Zenith Forecast

Global spending on online advertising will grow by 13% to $205 billion in 2017. This segment will account for 36.9% of all advertising budgets - compared to 34% in 2016. This year, for the first time, more will be spent on online advertising than on traditional television advertising ($192 billion), according to a Zenith report (March 2017).

2016

Zenith data

However, the growth rate of the online advertising segment is slowing down. In 2016, growth was 17% compared to 20% in 2015, the next annual figure is projected at 13%, and in 2018 and 2019 - 12% and 10%, respectively. But in money, expenses will still increase by $23-24 billion annually.

Since 2011, the global advertising market has grown at a steady pace of 4-5% per year, and the agency expects growth to continue through 2019. The forecast for 2017 is 4.4% (slightly lower than in 2016 - 4.6%), the same for 2018, and 4.2% for 2019. These values ​ ​ are slightly lower than the IMF predicts for nominal GDP.

Google, Facebook get nearly 50% of total online ad spending

China Outside of 72% of all online advertising revenue is shared by Google and. Facebook Also, these companies got 90% of the revenue from new advertisers in 2016. In 2018, two tech giants from Silicon Valley will account for almost half of the total volume of the Digital Signage market, estimated at $270 billion, reported Reuters in December 2016.

Facebook's share, according to forecasts, will reach 16% in 2018 and will grow, while Google may slightly give way to a share of 31% of the advertising market, according to eMarketer.

Facebook will increase its share in the advertising pie USA thanks to its audience targeting capabilities, which allow advertisers to receive direct contact with social network users, analysts say.

Facebook has also learned to successfully monetize its mobile audience: it brings the company about 78% of all advertising revenue. eMarketer predicts that in 2017 its share of Facebook will grow to 85%. Services like Instagram purchased by Facebook will also contribute to this. eMarketer also predicts that thanks to Instagram, the social network will increase its share in the banner advertising market.

Even Chinese large companies like Alibaba and Baidu are trying to catch up and overtake Zuckerberg at the expense of their local large market. Previously, large players like Altaba (formerly Yahoo) and AOL occupy less than 2% of the market. This indicator probably makes Verizon Communications wonder: is it worth spending money on the unprofitable Yahoo!?

2015: Forecast: Media advertising will bypass the scope of contextual

In 2015, advertisers' global spending on online media advertising will exceed the cost of contextual advertising, follows from the report of the ZenithOptimedia advertising group (June 2015). $66.2 billion will be spent on media advertising, and $62.5 billion on contextual advertising. In 2014, contextual advertising dominated: advertisers spent $55.6 billion on it, and $53.9 billion on media^[3].

Overall, the internet will remain the fastest growing media in the next three years, according to ZenithOptimedia. This market will grow by an average of 15% per year through 2017 inclusive. Whereas, for example, among traditional media, advertising in cinemas will have the highest growth rates - only 4% per year.

Within the Internet market itself, media advertising will grow the fastest - on average by 17% per year until 2017 inclusive. By media advertising, ZenithOptimedia means traditional banner advertising, online videos and social media advertising. Media advertising is becoming more interactive, making it more attractive to advertisers, the group's experts explain. And the development of technologies for automatic advertising purchases allows you to more effectively target advertising messages to the desired audience. In addition, advertising agencies are developing analytical tools that make it possible to more accurately measure the impact of advertising on users and track their activity on different types of devices - PCs, smartphones and tablets, the report says.

ZenithOptimedia notes that video advertising is becoming the growth driver of the media advertising market: this market will grow by 29% per year until 2017. Video advertising is now increasingly sold using automatic advertising procurement systems, the group said in a report. And many television companies began to actively sell videos on the air and video ads on the network in one package. Finally, video advertising benefits from improving the quality of smartphone screens, increasing their size, as well as improving the quality of communication. Users are increasingly watching video content online and, therefore, are more likely to view video ads.

Due to the transition of users to mobile devices, the segment of advertising on social networks is also growing (+ 25% per year until 2017 inclusive), the report says.

ZenithOptimedia does not explain why contextual advertising loses out on the growth of media advertising. According to the group's forecast, advertisers' spending on search promotion will grow by an average of 12% per year. Contextual advertising on desktop computers from 2006 to 2014 was the most popular format among advertisers who promoted their services and products online, according to the Interactive Advertising Bureau (IAB). Its share in their Internet budgets reached a maximum in 2009 and 2011. - about 46%. In 2014, its share decreased to 38%. The share of mobile advertising (both media and contextual) increased from 5% in 2010 to 25% in 2014.

Media advertising is growing due to video, social networks, automatic purchases, and not thanks to traditional banners, says Maxim Osipov, Managing Director of Dentsu Aegis Network. The market for contextual ads in recent years has increased primarily due to the influx of new advertisers, now in developed countries such advertisers are practically chosen, he argues, now the market will grow only with the growth of budgets, so there will be no more intensive growth of this segment. In Russia, this market has not yet reached saturation and will continue to grow at a faster pace than media advertising, he is sure.

According to the Association of Communication Agencies of Russia (AKAR), in 2014 the contextual advertising market grew by 27% to 65.5 billion rubles, the media advertising market fell by 5% to 19.1%. The market fell primarily due to banners, the video advertising market grew by 10%.

See also

• Online advertising (Russian market)
• Video advertising on the Internet (Russian market)
• Online Advertising (US Market)
• Online Advertising (European Market)

Notes