[SMK] Social Media Knowledge


Social Marketing Spend Up 20%

Social Media Now Accounts For 13% Of Global Adspend

Global social media ad spend will grow 20% this year, reaching $84 billion, according to Zenith, a media agency.

According to Zenith’s data, social media advertising will account for 13% of total global ad spend, overtaking newspaper and magazine investment.

Advertisers’ combined expenditure on newspapers and magazines will fall 6% to US$69bn.

Social media will be the third-largest channel for advertising this year, with a 13% share of global ad spend, behind television (29%) and paid search (17%).

The principal beneficiary of this increase in social investment is, no doubt, Facebook.

Facebook’s revenue for the second quarter of 2019 was $16.9 billion, with the company on track to earn in the region of $60 – $65 billion for the 2019 calendar year. Something sure to attract scrutiny from regulators and pressure groups alike.

Earlier this month Facebook drew criticism in the UK when its latest ‘Outrageous’ tax bill was released. Facebook paid £28.5 million in UK taxes last year despite reporting growing revenue of £1.65 billion from advertising sales.

Search Still Dominates But Google Will Feel Pressure

Meanwhile, paid search advertising will exceed US$100bn for the first time this year, reaching US$107bn by the end of 2019.

Paid search is growing at 8% a year and will amount to US$123bn in 2021, when it accounts for 18% of total ad spend.

Although, how much of that remains with market-leader, Google will be interesting over the next 2-5 years, given the steady rise of Amazon.

In data released on Monday, industry analysts eMarketer, forecast that in the US, Google’s share of search ad revenues will drop, while that of Amazon will grow over the next two years.

Google will obtain a 73.1% share, translating to $40.33 billion. But, while Google will remain the dominant player for the next several years, its share is dropping.

By 2021, Google’s share will reduce to 70.5% of the market.

The Rise Of Amazon As An Online Ad Player

Amazon launched its local marketing solutions earlier this year.

While it’s local marketing operation is still finding its feet, much like with Amazon’s broader business, it will no doubt become a significant marketing player in due course.

In 2019, Amazon’s US search business will grow nearly 30% over last year, boosting net search revenues to $7.09 billion.

Its share of search investment will be 12.9% this year, growing to 15.9% by 2021.

eMarketer principal analyst Nicole Perrin:

“Amazon’s ad business has attracted massive increases in spending because advertisers can reach consumers during product queries, a time when they’re ready to buy.

Amazon has also rolled out better measurement and targeting tools, making it even more attractive for advertisers.

Social and TV’s Differing Slowdowns

As social platforms mature, Zenith forecasts a slowdown in growth for 2020 and 2021.

Social’s growth is forecast at 17% in 2020 and 13% in 2021 when it is expected to account for 16% of all global ad spend.

The growth slowdown for social media, as a category, is mostly intertwined with poster-child Facebook’s slowdown.

Facebook CFO, David Werner, has cited an expected Facebook growth slowdown for some time. With growing privacy issues, one of the main culprits for the social giant.

“Privacy is a headwind for us in 2019,” Facebook CFO David Wehner said, speaking at a Morgan Stanley investment conference in February. “It’s one of the factors that’s contributing to our expected deceleration of revenue growth throughout the year.”

The soon-to-be introduced Facebook ‘Clear-History’ feature will have a substantial impact on Facebook’s ad targeting prowess. Unless, of course, they bury the new feature within Facebook’s existing, convoluted user privacy settings. Something it has claimed it will not.

Throw into the mix an overdue upgrade of local privacy legislation, in line with, or akin to, the EU’s General Data Protection Regulation (GDPR) and Facebook will be a far more challenging place to communicate for organisations.

The headwinds which should catch in Facebook’s sails over the next 12-24 months will also likely be problematic, to varying levels, for the remainder of the social players.

However, the issues impacting social players are perhaps more indicative of growing pains. With maturity comes greater regulation, responsibility and accountability. In theory anyway…

Television, on the other hand, has more existential worries, as TV advertising continues to suffer from shrinking ratings in key markets, according to Zenith.

Resultantly, TV is forecast to slip from US$182bn in 2019 to US$180bn in 2021, accounting for 27% of total ad spend in the latter year.

You can review Zenith’s latest global marketing spend forecasts here.

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