Companies - Online Advertising Spend

Goals

To understand, globally, how many companies spend money on online advertising, and of those, how much, on average do they spend. Ideally, this would be broken down by how many companies spend between $1-$500k a year, bucketed thusly: 1st group $1-$500k, 2nd group $500-$1m, 3rd group $1m-$5m, and 4th group over $5m.

Early Findings

  • Online advertisers are expected to outspend TV advertisers by $40 billion this year. That means 40 percent of the world's ad spending is expected to take place online in 2018, according to new forecasts from advertising measurement company Zenith.
  • All of this growth is taking place on mobile, which grew 25 percent this year to 60 percent of internet ad spending and 24 percent of total ad spending. Meanwhile, desktop ad spending declined nearly 4 percent.
  • 75% of internet advertising revenues in Q4 2018 remain concentrated with the top 10 leading ad-selling companies. This is 3% higher from the percentage reported in Q4 2017 (72%). Companies ranked 11th to 25th accounted for 7% of revenues in Q4 2018, a one percentage point decrease from the 8% reported in Q4 2017.
  • "Surpassing $100 billion in annual revenue is a watershed moment for the digital advertising ecosystem, one built on its power to build direct relationships between brands and today’s consumers. Innovative platforms like over-the-top television, podcasts, virtual reality, and augmented reality all have the potential to help marketers forge even stronger ties with audiences, as brands navigate the new consumer first playing field." - Randall Rothenberg, President and CEO, IAB.
  • Mobile advertising has continued to claim even more of the pie. It already accounted for the majority of digital ad spend in 2016, and in 2017, it grew to $49.9 billion (57 percent of the total, and a 36 percent year-over-year uptick).
  • The report comes at a time when the big advertising platforms are under increased scrutiny (and, in Europe, regulation). But Facebook and Google continue to exceed revenue expectations. And while the report doesn’t break out ad spending for any one company, it says the top 10 ad sellers accounted for 74 percent of ad spending in the most recent quarter (so it’s within the recent historical range of 70 to 75 percent).
  • A 2018 study by Gartner reported that marketing leaders planned to spend 29% of their marketing budget on marketing technology (up from 22% in 2017), making it the single largest area of investment for marketers, followed by labor, agencies and paid media. Email marketing platforms, web content management and digital marketing analytics platforms were the highest martech priorities. "In this year’s survey, CMOs reported that they spend, on average, over 21% of their marketing budgets on advertising. CMOs also spend more on digital advertising than on offline advertising, with two-thirds of their advertising budgets invested in paid digital channels, including search advertising."
  • Paywalled reports from Forrester Research and eMarketer show the estimated allocation of marketing funds offline versus online and across the digital channels. We have provided links to both, in case a purchase is desired. However, some conclusions from that report that are publicly available are: One: In 2018, the average firm was expected to allocate 42% of their marketing budget to online, and this rate is expected to grow to 45% by 2020. Two: Social media advertising investments will continue to grow, with a 17% compound annual growth rate from 2016 to 2021, and is expected to represent 25% of total online spending in 2018. Three: Digital marketing is pacing at an 11% compound annual growth rate between 2016 and 2021 with the biggest growth occurring in online video. Four: Investment in paid search, display advertising, social media advertising, online video advertising and email marketing is predicted to account for 46% of all advertising by 2021.
  • In a recent survey of 2,500 digital marketers, (free report) respondents reported on what marketing activities generated the best ROI. Email marketing still leads the way with the highest percentage of Excellent and Good ROI results reported, with social media marketing following closely behind.
  • Small businesses should budget 7-8% of gross revenues for marketing in order to compete against larger companies.
  • While the latest Forrester Research report projects that digital marketing spending will make up 44% of all ad spend, this number can vary depending on a variety of factors including industry, growth plans and local market.
  • More money is being spent on digital, at the expense of traditional advertising channels.
  • Total marketing budgets are typically between 7 and 12% of the total revenue of a company.

Summation Of The Availability Of Information Relevant To The Goals

  • Our first hour of research was unable to find any publicly available source that breaks down, globally or even just for the United States, how many companies spend money on online (digital) advertising. Additionally, as many companies are private, they are under no obligation to provide any information as to how or whether they spend money on advertising of any kind. Finally, even the companies that are public do not tend to disclose in their financial reports a breakdown on where they allocate their marketing dollars. In other words, even though they may indicate the total amount, they do not provide what they spent online.

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