October 6, 2014
This is a guest post by Samantha Merlivat, a researcher serving Marketing Leadership professionals.
US online display advertising will grow from $19.8 billion in 2014 to $37.6 billion in 2019, at a compound annual growth rate of 13.7%. The offline ad market, in comparison, will grow at a modest 1% CAGR over the same period. Forrester just released the latest US Online Display Advertising Forecast report, which details why the online display industry will have video and mobile to thank for the double-digit growth rate:
- Video advertising will represent nearly 55% of online display advertising revenue on desktop by 2019. Its growth will be cannibalizing primarily static display. Marketers’ preference for video and rich media reflects their new ambitions for online display: They are moving beyond the notion of display as a direct response tool, and starting to explore display as an engagement and branding tool.
- Mobile ads will represent 39% of total online display in 2019 compared with 24% in 2014. Tablet display, in particular, will be a medium to be reckoned with in the future as it comes to play a greater role in customers’ path to purchase and in web-influenced shopping.
- Exchange-based programmatic will go mainstream: In 2019, nearly 40% of total ad spend on desktop display will be traded through exchanges, compared with about 27% in 2014. An increasing number of advertisers and publishers find value in the efficiencies and efficacy delivered by programmatic trading,
The redistribution of online display revenue in favor of video and mobile will have important implications for marketers:
- Campaigns will have to be executed and measured across channels. This will prove particularly complex, as marketers are still waiting for a breakthrough in mobile targeting and measurement. Solutions like the one offered by Facebook with Atlas seem to be coming closer to that goal, but promises are still higher than results on this front.
- As brand advertisers increase their spending, the limitations of click-through rates as the key performance metric become apparent. We expect new metrics — like time spent — to emerge to address these needs, as they can also offer comparable insights across formats.
- While advertisers are keen to invest more in online display ads, the issues of ad fraud and viewability loom large. Marketers will increasingly turn to programmatic direct and private marketplaces to have more control over the placement of high-value display inventory. This will be particularly true for video.
In the EU, Forrester projects online display advertising spend to rise at a CAGR of 10.3% between 2014 and 2019, jumping from €7.3 billion to €11.9 billion. For more information on the European five-year forecast, visit this blog post.