Internet firms siphon off half of all US advert sales
Magna Global study predicts online advertising could surpass $100bn for the first time
Los Angeles — Online advertising will account for more than half of all US advertising sales in 2018, according to a study, surpassing $100bn for the first time and marking a milestone in the shift of money, time and attention to the internet from older media.
Having already exceeded the combined ad sales of print, radio and TV, online advertising in the US will increase 16% to $106.6bn, researcher Magna Global said in a report on Thursday. Led by Google and Facebook, the growth will boost the overall US advertising market to a record $207bn in 2018.
Alphabet, parent of Google and YouTube, and Facebook account for most online ad sales and show little sign of slowing down. Ad revenue from web searches, dominated by Google, grew 18% in the second quarter, Magna said.
Ad sales on social networks, led by Facebook, jumped 36%. Amazon.com has also emerged as a recipient of ad dollars, with projected revenue of $4.61bn, according to EMarketer.
Some of this digital growth is coming at the expense of TV, once the dominant medium for advertisers. National TV ads will rise 0.8% in 2018, Magna said, but only thanks to events that do not occur every year, such as the Olympics and US midterm elections. Excluding political ads, local TV sales will be down more than 4%.
The audience for major TV networks has been declining as more viewers waited to watch shows on-demand or abandoned conventional TV for streaming options such as Netflix and Hulu. TV networks have managed to stave off revenue losses by charging higher prices for their ads, avoiding the painful declines seen in radio and print.
But even that strategy is starting to falter. TV ad sales have declined in seven of the past eight quarters and are forecast to retreat for many years.
"A growing number of brands are being priced out of prime-time or network TV," said Vincent Letang, an executive vice-president at Magna.
Internet companies have positioned themselves to siphon even more ad dollars from TV by investing in video. Google owns the world’s most popular advertising-supported video site in YouTube and Facebook.
Sales for advertiser supported video on the internet climbed 28% in the second quarter and should eclipse both print and radio advertising by 2019, Magna said.