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Zenith

Programmatic adspend to grow 19% in 2019, reaching $84bn

65% of all money spent on advertising in digital media in 2019 will be traded programmatically.

That’s according to Zenith’s Programmatic Marketing Forecasts, which says advertisers will spend US$84bn programmatically next year, up from US$70bn this year, which represents 62% of digital media expenditure.

The forecasts predict that in 2020 advertisers will spend US$98bn on programmatic advertising, representing 68% of their expenditure on digital media advertising, encompassing all forms of paid-for advertising within online content, including online video and social media, but excluding paid search and classified advertising.

Zenith says the breadth of ad formats available through programmatic trading is improving, with more mobile, video and audio formats coming online all the time, though brands and agencies need to do more to push publishers to improve the quality of their inventory, which needs at minimum to be safe and viewable.

Growth in programmatic advertising is slowing as it cements its position as the most important method of digital trading. Zenith estimates that programmatic adspend will grow 24% in 2018, down from 32% growth in 2017, and forecast 19% growth in 2019, followed by 17% growth in 2020.

In dollar terms, the biggest programmatic market is the US, where Zenith expects US$40.6bn to be spent programmatically in 2018 – 58% of the total. China is in a distant second place, spending US$7.9bn on programmatic advertising this year, followed by the UK, with US$5.6bn of programmatic adspend.

The US is also the market that has most embraced programmatic advertising, trading 83% of all digital media programmatically this year. Canada is in second place, trading 82% of digital media programmatically, followed by the UK, with 76%, and Denmark, with 75%.

By 2020, programmatic advertising will account for more than 80% of digital media in all four markets. Canada will have almost completed the transition to pure programmatic trading, spending 99% of digital media programmatically that year.

Zenith expects all markets to follow Canada and use programmatic trading for all digital media transactions eventually. Indeed, it says it’s only a matter of time before programmatic trading becomes the default method of trading for all media. However, the transition is taking slightly longer than expected – last year Zenith forecast that 64% of digital media would be programmatic in 2018, and 67% would be programmatic in 2019, so it has pulled back both forecasts by two percentage points.

The introduction of privacy legislation such as the EU’s GDPR has had some chilling effect by making certain data previously used in programmatic transactions unavailable, and making other data more costly to process. But Zenith thinks the main reason for the slowdown in spending on programmatic media is that advertisers are investing more in infrastructure and data to make their programmatic activity more effective.

“Programmatic trading improves efficiency and effectiveness, and is gaining a dominant share of digital media transactions,” said Benoit Cacheux, Zenith’s Global Head of Digital and Innovation. “The scale of operational restructuring to make the most of it is both extensive and expensive, though, and advertisers are spending more carefully while they invest in infrastructure and data and review the quality of media. All programmatic advertisers need a strategy for acquiring the best and most comprehensive data available, and to treat this data as a vital corporate asset.”

“Technology is making programmatic advertising work harder for brands,” said Jonathan Barnard, Zenith’s Head of Forecasting and Director of Global Intelligence. “Artificial intelligence promises to unlock new understanding of customers as people, as well as improving the optimisation of the trading process.”

Online video viewing to exceed an hour a day this year

The average person will be spending 84 minutes a day watching videos online by 2020, according to the latest forecasts from Zenith.

In that year, China will have the keenest viewers, with the average person spending 105 minutes a day watching online video, followed by Russia (102 minutes) and the UK (101 minutes).

Zenith says this rapid rise in consumption is leading to a significant shift in the way brands plan campaigns across both television and online video.

The research covers 59 markets and encompasses all video content viewed over an internet connection, including broadcaster-owned platforms such as Hulu, ‘over-the-top’ subscription services like Netflix, video-sharing sites, e.g. YouTube, and videos viewed on social media.

Global online video consumption grew by 11 minutes a day in 2017, and we expect it to grow by an average of 9 minutes a day each year to 2020.

It accounts for almost all the growth in total internet use, and is growing faster than media consumption overall, so it is taking consumption time from traditional media.

Although some of this extra viewing is going to non-commercial platforms such as Amazon Prime and Netflix, Zenith says plenty of it is going to commercial platforms, so the supply of commercial audiences is rising rapidly.

In fact, the firm estimates that online video adspend grew 20% in 2017, to reach $27bn. Growth peaked at 36% in 2014 and has fallen steadily since then, but still remains high. It forecasts 19% growth in 2018, and an average of 17% annual growth to 2020, when online video adspend will reach $43bn.

Video’s share of online display advertising is rising steadily: it accounted for 27% of display adspend in 2017, and Zenith expects it to account for 30% in 2020.

Online video advertising is still only a fraction of the size of television advertising, but because television is stuck at 0% to 2% annual growth, this fraction is rising rapidly. The online video ad market was 10% of the size of the television ad market in 2015, and 14% in 2017. By 2020 Zenith expects online video adspend to be 23% of the size of television adspend.

“Online video is driving growth in global media consumption, as smartphones with high-speed data connections make high-quality video available to people on the move, and smart TV sets give viewers unparalleled choice in the living room,” said Jonathan Barnard, Zenith’s Head of Forecasting and Director of Global Intelligence. “The rapid rise in video viewing makes online video the world fastest-growing advertising format, creating new strategic and creative opportunities. Brands that do not currently have a strategy for online video need to think about getting one.”

28% of media consumption will be by mobile internet in 2020

24% of all media consumption across the world will be by mobile internet this year, with figures suggesting that by 2020 this number will increase to 28%, according to new data published in Zenith’s Media Consumption Forecasts 2018.

The figures show a dramatic increase in media consumption by mobile across the world, which was just 5% back in 2011, with mobile eroding the consumption of nearly all other media, including newspapers and magazines.

The report reveals that time spent reading traditional print media such as newspapers has fallen by over 45%, and 56% for magazines. However, those that have adapted to online have gained from what was lost in print readership.

The rise of mobile has directly influenced the way that brands now plan communications, focussing less on channels and more on consumer mind-set and behaviour.

TV and radio are also losing the battle against the rise of mobile, although not as dramatically as traditional print media, with the average time spent watching TV shrinking by 3% between 2011 and 2018, along with time spent listening to radio down by 8%.

Brands can now take advantage of the various boundaries that mobile offers through different channels, entertainment, news, information, research, communication and socialising building awareness with the ability of creating direct responses and one-to one communication.

Zenith says the rapid expansion of mobile internet use has increased the amount of time the average individual spends consuming media, by giving people access to essentially unlimited content almost everywhere, and at any time of the day. We estimate that the average person will spend 479 minutes a day consuming media this year, 12% more than in 2011. Zenith forecasts the total to reach 492 minutes a day in 2020.

“Under traditional definitions, all other media are losing out to the mobile internet,” said Jonathan Barnard, Zenith’s head of forecasting and director of global Intelligence. “But the truth is that the distinctions between media are becoming less important, and mobile technology offers publishers and brands more opportunities to reach consumers than ever.”

“Mobile technology is challenging brands to rethink how they communicate with consumers,” said Vittorio Bonori, Zenith’s global brand president. “Brands need to understand both the consumer’s mind-set and where they sit on the consumer journey, to determine how to communicate with them. By using data, ad tech and now artificial intelligence, brands can co-ordinate their communications across media and mind-sets to move them along the consumer journey most effectively.”

500 European C-suites reveal their thoughts on branded content

500 European c-suites had their say about branded content in the most extensive research study of its kind released in 2017, revealing an unexpected set of results.

Content marketing specialist Raconteur undertook a recent survey of over 500 European c-suites, with the results as follows:

  • It’s boring, repetitive and predictable! (71%)
  • It’s often too sales-driven and not credible (51%)
  • Bad design (UX and look & feel) kills engagement (57%)
  • Brands are missing a trick by shying away from long-form (65%)

This might sound like bad news for brands, but it’s not all doom and gloom. The report reveals that c-suites are in fact hungry for content – and many will actively research new sources themselves in the quest for the right kind. If brands manage to make a good impression, they will have won a valuable and trusted relationship.

The report provides a more in-depth picture than similar research in the same area. It corroborates many of the results from smaller studies by Forbes/ Deloitte, Grist and EUI when it comes to the appetite for thought leadership. However, the report also nuances and builds on the factors that produce successful content, especially in the area of design, which is the number one factor for engagement, according to Raconteur’s survey.

The findings are reinforced with commentary from leading industry experts and brands, such as Jason Miller, Global content marketing leader at LinkedIn, Jeremy Waite, Evangelist at IBM, Tom Goodwin, Head of Innovation at Zenith and Mark Schaefer, Adjunct Marketing Professor at Rutgers University.

In an age where there is over 211 million pieces of content produced every minute and ad-blocker use is rocketing, the report highlights the importance of investing in understanding your audience in order to cut through the noise. Brands who pick up this research are already closer to producing more meaningful and impactful content.