Internet Ad Spend Is Going To Surpass TV Ad Spend in 2017
For the very first time, internet ad spend is going to take over TV ad spend this year. No one can say that they did not see this coming. I mean, come on, TV is getting replaced by streaming services like Netflix, Hulu, and the likes. Social media is the new pastime. The Internet has been slowly taking over our lives and now it’s driving the last nail in the coffin. This is the first time in the history of TV that money is not being channeled towards the networks.
According to Mary Meeker’s Internet Trends Report, Internet ad spend is going to exceed TV advertising in 2017 by $200 billion. And, trust me, her reports have always been more than reliable.
So, let’s take a look at the future.
Increase In Internet Ad Spend: A Massive Shift In Business
Digital advertising or Internet ads have been pulling money from traditional media for quite some time. And, that’s not all. Along with this, it has been creating brand new opportunities in the local as well as national level.
Streaming services and social media websites continue to grow their user bases, and they are not slowing down. 40% of US households that have internet access will have a streaming device by the end of this year. In fact, the first quarter of 2017 saw Netflix’s user base stand at 98.75 million.
People are canceling their standard TV packages as they are being seduced by the lower costs of online streaming services. More than 800,000 US customers decided to cut the cord in 2016’s second quarter. And according to analysts, there has been a gradual increase in the rate of decline. In fact, the number of TV subscribers dropped by 1.4 million in 2016 from 2014.
What Does The Digital Scenario Look Like Right Now?
Smartphone usage and internet usage are at an all-time high. If you are not advertising on the Internet then you are losing out on valuable sales. Last year $73 billion was the Internet ad spend in the US alone. More importantly, marketers are focusing on Facebook and Google the most. These two websites have seen a 20% and 62% growth in Internet ad spend respectively. In fact, 85% of the Internet ad spend last year was spent on these two websites.
While online streaming services have helped consumers move out of the TV market, it is these two websites that are being used the most. As a result, marketers are spending large amounts of their budget on these two websites.
And, it’s not just desktop users that marketers are targeting. Out of the $73 billion spent on digital advertising last year, $35 billion went to mobile ads. On an average, every smartphone user spends around 3.1 hours of their entire day on a mobile device. So, it makes perfect sense. In fact, the average US citizen spends more time on their mobile device than on their desktop.
But… with great powers come great responsibilities. Not all advertisers and marketers are the same. Some have irritating advertising habits and that has given rise to ad-blockers. There are nearly 350+ million mobile users out there who use an ad-blocker on their devices.
Most people who are using ad-blockers feel annoyed by random, irrelevant ads. Hence they are quick to block them in order to have a seamless experience online.
As you can see for yourself, there is a huge opportunity for marketers in the digital space. But, to be successful you need the right strategy and target the right audience. Otherwise, consumers will just block your ads. And, that definitely does not help your cause in any way. This is a problem that Facebook has identified and addressed right away. That’s why their ad revenue is growing at a faster rate than Google’s.
Facebook is driving direct purchases on their messaging platform. They are using all the data that they have on their customers to show relevant ads.
What Does This Mean For The Near Future?
So, mobile and social media seems to be the key takeaways when it comes to Internet ad spend this year. But what about TV? At least for the time being, companies will spend on TV advertising. But, the truth is, there has been no significant increase in advertising budgets of most organizations. That means marketers are just using the money that they would put on TVs for the Internet. That is why the Internet has been able to take over TV in just a matter of time.
Commercialized TVs have been here since 1941. While the Internet as we know it just popped up two decades back. Digital is the dominant player right now, but this is uncharted territory for everyone. So, it is more of a game of wait and watch. Will the TV industry fight back? Or will they succumb to the colossus that is the Internet?