The online ad industry has been experiencing a long period of incredible growth.
Every year it seems to soar to new heights. Occasionally the question is posed, how much further can it go?
It can go further. Much further.
The online advertising industry’s growth, in the beginning, was primarily based on the absorption of ad spend from other, more traditional sectors. This has occurred as consumers changed their habits and developed new ones.
Where consumers used to get their news from the paper, they now get it online. Where they used to watch most video content in the living room on the television, now they increasingly consume it online.
This is especially true for young consumers, who are particularly in demand among advertisers.
These were mostly just transitions in the way certain media types were served.
The habit was already there; digitalization merely changed it.
They haven’t just changed habits, though. New habits and consumption patterns have developed, too.
The smartphone, for example, led to the birth of totally new patterns of consumption.
Instead of a simple change of means of delivery, whole new sectors were born.
Because this transition (that is to say, the digitalization of most forms of legacy media) is still ongoing, growth from this transition online will continue as well.
But there are two other important trends that are likely to help digital advertising sustain its astounding growth. These trends are the growth of Social/User-generated media and growth in developing economies.
In this article, we are going to take a cursory look at historical industry growth and then a quick look at the driving factors of future growth.
Digital advertising is already a behemoth.
The United States is the richest country in the world and home to the world’s biggest and most dynamic economies. It is also the region that, before are all others, has been driving the so-called digital transition.
This domination of the online sector is illustrated by the fact that practically every single tech giant is based in the United States. Microsoft, Apple, Google, Facebook, Amazon, etc. They’re all in the USA.
So not only did the digital transition get started in the USA, but it has also remained the primary driver of innovation in internet technology and consumer tech in general.
Between the head start that it has maintained and the robust consumer economy, American digital ad revenue has always been a cut above the rest.
And this year it reached a new height. 100 billion dollars.
That’s right, American ad revenue has broken the hundred billion dollar point. It’s now a larger percentage of told ad spend than both print and television.
But it’s not done supplanting these two entrenched media, and this is the first area where future growth can be expected.
Traditional is going online
The meteoric growth of online advertising was in a large part the result of the internet’s ability to serve ads of all forms.
Whereas print can only serve text and picture ads, radio only audio ads, and television only video ads, the internet can serve all of the above and more.
This is the primary reason that the internet is going to continue cannibalizing these legacy media forms. The internet wraps all of their individual strengths into one.
Legacy video services are either replaced by or integrated into online, on-demand sources. Most major cable and satellite news channels not only have YouTube channels now, but their video coverage is also often available right on their websites.
In fact, the average age of the cable news viewer is constantly increasing. Traditional n
In terms of print, major news and opinion publications like newspapers, magazines, and reviews are posting strong numbers online. Likewise, their business continues to transition online as user consumption patterns trend in that direction.
But while their online viewership numbers may be good, many are still struggling to compete with native digital competitors.
To illustrate the huge decline in print media in the face of digital competition, just look at the numbers. Between 1994 and 2018 print circulation declined from 60 million to 35 million.
In the same vein, their ad and subscription revenue remains tied to advertising. And advertising revenue depends on readership.
Online advertising is also significantly more versatile and vibrant online than it is in traditional print mediums.
Radio, too, is attempting to move its business online. Practically every major AM or FM station has been available live on its websites for the last decade.
The point is that all of the traditional media sources are going online. This means ipso facto that, even if they maintain dominant positions, all of their advertising is undergoing a transition to digital.
Social media and user-generated content outperform traditional competition
But the thing is that these media sources grew up in a totally different environment. It’s called legacy media because the world has moved on and they’re still trying to catch up.
The legacy media may be going online, but in many cases, it is being entirely replaced by new forms of media.
These new kinds of media developed organically within the digital ecosystem and have become the preferred means of consumption for so-called “digital natives.”
TV, Radio, and Print giants find themselves unable just to go online and dominate the space like the once did. In legacy industries, the barrier to entry is extremely high. One couldn’t start a TV station, a radio station, or a newspaper. All of these required expensive, difficult-to-use equipment.
This all changed on the internet.
Legacy media lost most of its competitive “moat” when they began transitioning online. News channels now compete with YouTube commentators recording at home. Podcasters compete with radio talking heads.
Moreover, these media giants found themselves hindered by their size, and they floundered in this new medium.
For they were no longer dominant players, they were dinosaurs.
Radio stations find themselves in competition with Pandora, Spotify, and Deezer. Talk shows compete with podcasts and YouTube channels.
The established digital position of services like Netflix, Amazon Prime Video, and Hulu make it even harder for legacy media giants to reproduce their dominance online.
Further, print media found itself competing with tens of thousands of bloggers and independent reporters online, all of whom enjoyed the same potential access to customers via the internet.
But it’s not just that legacy media is finding established players and low barriers to entry as it moves online, it’s also finding another problem. A lot of what it had to offer has been one-upped by social media.
Governments, presidents, and businesses no longer need press conferences and PR releases filtered through the media to reach the public, rather they can simply make a tweet.
Similarly, live on-the-ground reporting can’t keep up with Facebook, Twitter, and Periscope. When everyone has a camera, microphone, and internet connection wherever they are, there’s always going to be someone else to relay events long before the traditional media can get there.
While traditional media transitioning online naturally brings a measure of growth to the online advertising industry, social media is an even bigger factor.
Why?
Because it’s not static, it’s interactive. A user doesn’t just want the news or a show or read an article. He reads, interacts, watches, shares, reacts, comments, argues. Social media both as a form of entertainment and as a vector for news allows for sharing and interaction.
The social media user is both more engaged and engaged longer. Both of which bode well for anyone trying to reach these consumers via advertisement.
So while traditional media mammoths are trying to break into the digital space (becoming a part of the digital advertising ecosystem), native digital social applications are a more significant driver of growth.
The developing world is online. And it’s mobile.
The thing is, while these two phenomena have driven growth for a long time, and will undoubtedly continue to drive growth in the future, they are trends that have been playing out for some time now.
Facebook and Twitter span age groups and social class. And the New York Times and the Washington Post have been perfecting their digital game for years now.
These are not new trends. Their growth will be stable and significant, but will also be predictable and evolutionary. Traditional media is slowly figuring out how to survive online, and social media already has its own giants (something that’s becoming somewhat contentious).
The third and most important trend (by far) is the developing world and the way it consumes and will consume in the future.
A continental game of leapfrog
Leapfrogging is a process whereby an economy or region skips the traditional developmental path that other economies have followed. Rather, by nature of these technologies already existing, they skip right to the latest technology, thereby “leapfrogging” the infrastructural buildup that developed nations had to follow.
The online ad industry has been experiencing a long period of incredible growth. According to eMarketer, the total global ad spend for 2019 is expected to attain a height of $333.35 billion.
That’s 17.6% growth over spend in 2018.
And even as the online ad
How much further can online ad spend go?
It can go further. Much further.
The online advertising industry’s growth, in the beginning, was primarily based on the absorption of ad spend from other, more traditional sectors. This has occurred as consumers changed their habits.
Where consumers used to get their news from the paper, they now get it online. Where they used to watch most video content in the living room on the television, now it’s being consumed online.
These were mostly just transitions insofar as how certain media types were served. The habit was already there; digitalization merely changed it. They haven’t just changed habits, though. New habits and consumption patterns have developed, too.
The smartphone, for example, led to the creation of totally new consumer patterns. Instead of a simple change of means of delivery, whole new sectors were born.
Because this transition, that is to say, the digitalization of most forms of legacy media, is still ongoing, growth from this transition online will continue as well.
But there are two other important trends that are likely to help digital advertising sustain its astounding growth. These trends are the continued development of Social/User-generated media and growth in developing economies.
In this article, we are going to take a cursory look at historical industry growth and then a quick look at the driving factors of future growth.
Digital advertising is already a behemoth.
The United States is the richest country in the world and home to the world’s biggest and most dynamic economy. It is also the region that, before are all others, has been driving the so-called digital transition.
This domination of the online sector is illustrated by the fact that practically every single tech giant is based in the United States. Microsoft, Apple, Google, Facebook, Amazon, etc. They’re all in the USA.
So not only did the digital transition get started in the USA, but the country has also remained the primary driver of innovation in internet technology and consumer tech in general.
Between the head start that it has maintained and the robust consumer economy, American digital ad revenue has always been a cut above the rest. And last year it too reached a new milestone:
Digital ad spend exceeded 100 billion dollars.
That’s right, American ad revenue has broken the hundred billion dollar point. And this year digital ad spend has surpassed all traditional media combined in the USA.
But it’s not done supplanting these two entrenched media. Traditional media is still huge and digital will continue eating away at it.
This is the first driver of future digital ad growth we will look at.
Traditional is going online
The meteoric growth of online advertising is primarily the result of the internet’s ability to serve ads of all forms.
Whereas print can only serve text and picture ads, radio only audio ads, and television only video ads, the internet can serve all of the above and more.
This is the primary reason that the internet is going to continue cannibalizing these legacy media forms. The internet wraps all of their individual strengths into one.
Legacy video services are either replaced by or integrated into online, on-demand sources. Most major cable and satellite news channels not only have YouTube channels now, but their video coverage is also often available right on their websites.
In fact, the average age of the cable news viewer is constantly increasing. News organizations
In terms of print, major news and opinion publications like newspapers, magazines, and reviews are posting strong numbers online. Likewise, their business continues to transition online as user consumption patterns trend in that direction.
To illustrate the huge decline in print media in the face of digital competition, just look at the numbers. Between 1994 and 2018 print circulation declined from 60 million to 35 million.
In the same vein, their ad and subscription revenue remains tied to advertising. And advertising revenue depends on readership.
Online advertising is significantly more versatile and vibrant online than it is in traditional print mediums.
Radio, too, is attempting to move it’s business online. Practically every major AM or FM station has been available live on its websites for the last decade.
The point is that all of the traditional media sources are going online. This means ipso facto that, even if they maintain dominant positions, all of their advertising is undergoing a transition to digital.
Legacy media is being replaced my social user-generated media. The legacy media that is surviving is moving online.
But the thing is that these media sources grew up in a totally different landscape. It’s called legacy media because the world has moved on and they’re just catching up.
The legacy media may be going online, but in many cases, it is being entirely replaced by new forms of media. These new kinds of media developed organically within the digital ecosystem and have become the preferred means of consumption for so-called “digital natives.”
TV, Radio, and Print giants find themselves unable just to go online and dominate the space like the once did. In legacy industries, the barrier to entry is extremely high. One couldn’t start a TV station, a radio station, or a newspaper. All of these required expensive, difficult-to-use equipment.
This all changed on the internet.
Legacy media lost most of its competitive “moat” when they began transitioning online. News channels now compete with YouTube commentators recording at home. Podcasters compete with radio talking heads.
Moreover, these media giants found themselves hindered by their size, and they floundered in this new medium.
For they were no longer dominant players, they were dinosaurs.
Radio stations find themselves in competition with Pandora, Spotify, and Deezer. Talk shows compete with podcasts and YouTube channels.
The established digital position of services like Netflix, Amazon Prime Video, and Hulu make it even harder for legacy media giants to reproduce their dominance online.
Further, print media found itself competing with tens of thousands of bloggers and independent reporters online, all of whom enjoyed the same potential access to customers via the internet.
But it’s not just that legacy media is finding established players and low barriers to entry as it moves online, it’s also finding another problem. A lot of what it had to offer has been one-upped by social media.
Governments, presidents, and businesses no longer need press conferences and PR releases filtered through the media to reach the public, rather they can simply make a tweet.
Similarly, live on-the-ground reporting can’t keep up with Facebook, Twitter, and Periscope. When everyone has a camera, microphone, and internet connection wherever they are, there’s always going to be someone else to relay events long before the traditional media can get there.
While traditional media transitioning online naturally brings a measure of growth to the online advertising industry, social media is an even bigger factor.
Why?
Because it’s not static, it’s interactive. A user doesn’t just want the news or a show or read an article. He reads, interacts, watches, shares, reacts, comments, argues. Social media both as a form of entertainment and as a vector for news allows for sharing and interaction.
The social media user is both more engaged and engaged longer. Both of which bode well for anyone trying to reach these consumers via advertisement.
So while traditional media mammoths are trying to break into the digital space (becoming a part of the digital advertising ecosystem), native digital social applications are a more significant driver of growth.
The developing world is online. And it’s mobile.
The thing is, while these two phenomena have driven growth for a long time, and will undoubtedly continue to drive growth in the future, they are trends that have been playing out for some time now.
Facebook and Twitter span age groups and social class. And the New York Times and the Washington Post have been perfecting their digital game for years now.
These are not new trends. Their growth will be stable and significant, but will also be predictable and evolutionary. Traditional media is slowly figuring out how to survive online, and social media already has its own giants (something that’s becoming somewhat contentious).
The third and most important trend (by far) is the developing world and the way it consumes and will consume in the future.
A continental game of leapfrog
Leapfrogging is a process whereby an economy or region skips the traditional developmental path that other economies have followed. Rather, by nature of these technologies already existing, they skip right to the latest technology, thereby “leapfrogging” the infrastructural buildup that developed nations had to follow.
An excellent example of this is the development of telecommunications infrastructure in Subsaharan Africa. Rather than developing large, expensive analog fixed telephone networks, followed by cable, and fiber. They have opted mainly to build advanced cellular infrastructure as the cost of construction and maintenance is lower, and convenience is far greater.
But this trend to move directly to cellular is not limited to Africa; it can also be seen all over the underdeveloped parts of Asia.
These are huge nations that are not only all getting online at the same time, but they’re also expected to be the drivers of both demographic and economic growth over the ensuing decades.
Between the expected growth and the direct jump to modern, mobile digital consumption habits, these nations are likely to drive the growth of global mobile advertising for the foreseeable future.
Just to quickly look at the numbers.
Africa, as it stands, is home to around 1.3 billion people. Most of whom live in undeveloped economies. Many of which are severely underdeveloped. That is to say that even without demographic growth, Africa would be in a unique position to drive global economic growth. Much of which
But demographic growth is expected to be substantial. In fact, by 2050 it is expected to reach 2.5 billion. Then, 4 billion by 2050.
Smartphone ownership in Africa, specifically Subsaharan Africa, is still low. But mobile phone ownership is very high. It can be expected, then, that as smartphones continue to get cheaper, and African countries wealthier, that smartphone ownership will continue to grow.
The developing world in general, but Africa, in particular, offers a particularly unique opportunity for digital ad growth – especially in mobile.
Conclusion
Traditional forms of media aren’t going away; they’re just going online. The progression of this transition will continue driving digital ad spend growth in the future.
Furthermore, the continued development of native digital services will also continue driving growth, likely in a more significant way than traditional legacy media’s digitalization. The former has to adapt to the internet; the latter was born in it.
But both of these pale in comparison to the growth that will be made possible by the developing world leapfrogging straight to a digital, mobile consumption style.
The growth of the advertising industry over the coming decades will be overwhelmingly digital. And the growth of digital advertising will be primarily mobile.
To take advantage of this growth, advertisers need to have the right tools for the job.
Enter Mobinner.
Mobinner is a high-performance Demand-Side Platform that is particularly strong in mobile advertising. By connecting directly with mobile users both through web traffic and in-app placement, we drive brand awareness, growth, user acquisition, and engagement.
Come check out how we can help position you for growth.
An excellent example of this is the development of telecommunications infrastructure in Subsaharan Africa. Rather than developing large, expensive analog fixed telephone networks, followed by cable, and fiber. They have opted mainly to build advanced cellular infrastructure as the cost of construction and maintenance is lower, and convenience is far greater.
But this trend to move directly to cellular is not limited to Africa; it can also be seen all over the underdeveloped parts of Asia.
These are huge nations that are not only all getting online at the same time, but they’re also expected to be the drivers of both demographic and economic growth over the ensuing decades.
Between the expected growth and the direct jump to modern, mobile digital consumption habits, these nations are likely to drive the growth of global mobile advertising for the foreseeable future.
Just to quickly look at the numbers.
Africa, as it stands, is home to around 1.3 billion people. Most of whom live in undeveloped economies. Many of which are severely underdeveloped. That is to say that even without demographic growth, Africa would be in a unique position to drive global economic growth. Much of which being closely linked to a mobile and connected population of digital consumers.
But demographic growth is expected to be substantial. In fact, by 2050 it is expected to reach 2.5 billion. Then, 4 billion by 2050.
Mobile phone ownership in Africa, specifically Subsaharan Africa, is still low. But mobile phone ownership is very high. It can be expected, then, that as smartphones continue to get cheaper, and African countries wealthier, that smartphone ownership will continue to grow.
The developing world in general, but Africa, in particular, offers a particularly unique opportunity for digital ad growth – especially in mobile.
Conclusion
Traditional forms of media aren’t going away; they’re just going online. The progression of this transition will continue driving digital ad spend growth in the future.
Furthermore, the continued development of native digital services will also continue driving growth, likely in a more significant way than traditional legacy media’s digitalization. The former has to adapt to the internet; the latter was born in it.
But both of these pale in comparison to the growth that will be made possible by the developing world leapfrogging straight to a digital, mobile consumption style.
The growth of the advertising industry over the coming decades will be almost entirely digital. And the growth of digital advertising will be primarily mobile.
To take advantage of this growth, advertisers need to have the right tools for the job.
Enter Mobinner.
Mobinner is a high-performance Demand-Side Platform that is particularly strong in mobile advertising. By connecting directly with mobile users both through web traffic and in-app placement, we drive brand awareness, growth, user acquisition, and engagement.
Come check out how we can help position you for growth.
