APAC to overtake North America as world’s biggest digital ad market

Map of the World_Nicolas Raymond_Flickr_Featured Image

The Asia Pacific region is expected to overtake North America this year as the world’s biggest market for digital advertising spend, according to a report from Strategy Analytics.

Digital ad spend across APAC is expected to rise 18.2% in 2016 and be worth $59.7 billion. In North America it will rise 9.6% to $59.5 billion.

Strategy Analytics_Trend in Digital Ad Spend by Region_600

*Source: Strategy Analytics

APAC’s digital growth is being driven by China, which will see digital advertising spend increase 25.1% this year to $22.4 billion. China is the world’s second biggest country for digital spend, behind the U.S. ($55.6 billion). Together, these two countries will account for 44% of global digital ad spend, the report says.

Total global digital ad spend will reach $177 billion this year, making up almost a third (32%) of total advertising spend at $560 billion. That will rise to $678 billion by 2021, when digital spend will account for 40% of total ad spend.

Strategy Analytics_Digital Ad Spend v Total Ad Spend_600

*Strategy Analytics Advertising Forecast, 2016

Other key findings in the report show:

Spend per capita

North America spends the most per person on digital advertising spend at $165 per person, followed by Western Europe ($95). APAC’s huge population puts digital advertising spend per person at $15.

“Asia-Pacific’s relatively low ad spend per capita shows the tremendous potential for growth compared to the more saturated markets in the West, particularly with mobile phones removing a barrier to internet access in less developed markets.

This will grow the online population dramatically and, consequently, ad spend will follow suit,” says Michael Goodman, digital media director at Strategy Analytics.

Search dominates digital ad spend

The report finds search makes up the majority (52%) of global digital ad spend in 2016. Factors driving the growth of paid search include better localization of search results, geo-targeting, and mobile ad enhancement, the report says.

Two of the world’s top five search engines by ad revenues are in China, where Google is banned. Google tops the list, with advertising revenue in 2015 worth $43.98 billion, followed by Baidu ($6.91 billion), Microsoft ($2.48 billion), Yahoo ($1.69) and Sohu ($0.47 billion).

Display is the fastest growing digital segment, expected to see a 2016-2021 CAGR of 10%. Strategy Analytics attributes this to strong growth in online video and social network advertising. Globally, display advertising will surpass $100 billion by 2021.

Strategy Analytics_Digital Break down_600

*Strategy Analytics Advertising Forecast, 2016

Video

Video will account for 15% of digital ad spend this year, totaling $19.05 billion. By year-end 2021, this is expected to more than double to $40.15 billion.

Social networks

Social network advertising accounts for 10% of total digital ad spend and was worth $21.55 billion in 2015. Strategy Analytics expects this segment of the market to expand at a CAGR of 15% between 2016 and 2021, with revenues more than doubling during this period.

Google and Facebook

Google and Facebook account for more than half (54%) of digital ad spend globally, and their share continues to grow. Growth in mobile advertising in particular made up 80% of Facebook’s ad revenue in Q4 2015, (up from 69% of in Q4 2014).

Strategy Analytics_Google_Facebook_600

*Strategy Analytics Advertising Forecast, 2016

Traditional ad spend

Television continues to dominate global advertising budgets, accounting for 37% of total ad spend. Strategy Analytics expects television to continue its dominance until 2019 when it will be overtaken by digital spending at 35% and 37% respectively.

Strategy Analytics_Ad spend split by media_600

*Strategy Analytics Advertising Forecast, 2016

The big loser is print which continues to lose out to digital spending.  Print advertising will account for 18% of total ad spend in 2016, from 22% just two years ago.

Conclusion

By 2021, 40% of all ad spend will go to digital channels.

“Digital has been the fastest growing form of advertising over the past decade and is the driving force behind global advertising growth,” the report says.

“As online audiences continue to steadily grow so to do the number of online publishers.”

Strategy Analytics finds key drivers for digital ad spend are:

  • Growth in household broadband penetration & internet users
  • Improved broadband speeds
  • Growth of connected devices
  • Improved digital targeting
  • Changing video consumption patterns
  • Strong growth in social media advertising and mobile advertising
  • Ongoing transition from print advertising to digital advertising

*Featured image: Nicolas Raymond / Flickr

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