Profits of Facebook Ads to Exceed TV in 5 Years

Profits of Facebook Ads to Exceed TV in 5 Years

The influence of major brand funding and events – such as the Olympics, European Football Championship, and US Presidential Election – drove 2016’s global advertising revenue growth to $532 billion.

“The advertising industry is about to turn the corner, thanks to the global economy getting back on track,” said Eleni Marouli, a principal analyst at IHS Technology.

Advertising Revenue will Continue to Grow

Advertising revenue grew up to 7.1 per cent in 2016 to $532 billion. Formidable growth in global real private consumption also steered advertising revenue as brands tried to take advantage of increased consumer spending. Advertising revenue accounted for 0.69 per cent of global GDP in 2016, up from 0.66 per cent in 2015, the report said.

“The top 10 markets still account for the lion’s share of global advertising revenue,” Marouli reported. “However, their collective power has dropped due to slowdowns in the Chinese and Brazilian economies, which were the rising stars in the top 10 in 2015.” The top 10 accounted for more than seventy per cent of global ad revenue in 2015; however, it dropped to 75 per cent last year.

Africa Among the Prime Movers in Advertising

“Ghana and Kenya have been high on the list of many media companies’ expansion plans, and we are seeing growth above 20 per cent,” mentioned Marouli. “These markets are still growing from a low base, but the sheer size of their populations means they are becoming interesting targets for big brands.”

TV is Still #1… But, Wait Until the Next Five Years

TV was the number one medium globally for advertising revenue, accounting for $192 billion, or 36 per cent, of global revenue.

“Despite the incredible growth of online giants, like Facebook, Google and Snapchat, the TV market continues to benefit from big brand budgets,” Marouli stated. “Quadrennial events such as the Olympics, the European Football Championship and the US elections helped keep TV on top.”

But be on the lookout – revenue from online advertising will most likely overtake TV within the next five years. “In some countries, such as the UK, online already accounts for almost 50 per cent of total advertising revenue and will only keep getting stronger.” Marouli stated.

Online Advertising is on the Rise

Last year, online advertising accounted for almost $160 billion, or 30 per cent of global revenue. Print advertising sat in third with $101 billion, followed by radio with 8.4 per cent of the market and $47 billion in revenue.

In the US, TV advertising revenue made up roughly 38 per cent of the country’s total; online is just behind with 36 per cent.

Online Ads Beat TV in China

In China, online advertising revenue rose to 17 per cent, greater than TV advertising revenue, a difference of $15 billion. The most mature markets are mostly high GDP per capita markets, according to Marouli. Israel topped the list at $719, followed by Switzerland and the US. China generated only $65 per person in advertising, despite being the second largest advertising market.

“We expect global advertising revenue will grow to $590 billion in 2017,” Marouli reported. “The strongest growth will come from the Middle East and Africa, followed by Asia Pacific, where India and Indonesia will steal the show.” First world markets are likely to slow down in an “event-light”, following the high spending for the Olympics and the US elections, the report said.

There’s No Stopping the Growth of Online Advertising

Online – especially social media – advertising will continue to be a rapidly growing medium at 14 per cent, and at this pace will more likely beat TV by the next 5 years.

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