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Artificial Intelligence Marketing Blog

January
4
2017

by Or Russo
Adgorithms’ General Manager

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What Will Ad Spending in 2017 Look Like? eMarketer Has Some Ideas

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2016 was a historic year for digital advertising, outpacing TV ad spending for the first time in history. Marketers should be looking for ways to optimize their spending with AI.

The world of advertising is changing rapidly. For the last 60 years, television was where marketers strove to reach target demographics, and spots during big events like the Super Bowl brought in some $5 million per ad. Now that pay-TV providers are hemorrhaging users, however, the advertising pendulum is swinging more towards digital than ever before.

An eMarketer report from early 2016 shows that for the first time in history, digital media spending overtook TV advertising in the U.S. A more recent report predicts that in 2016, U.S. digital ad spending will top $72 billion, whereas TV spending will end up somewhere around $71.29 billion. Moving forward, it appears that digital advertising will come to dominate the ad landscape — as well as the attention of consumers everywhere.

What to Expect in 2017

Advertisers will continue to capitalize on the opportunities yielded by digital marketing in 2017, and eMarketer projects a 15% increase to $82.86 billion spent across all channels, compared to television’s $72.72 billion. The trend is set to continue in coming years as well, with digital expected to outpace TV by a good $35 billion in 2020.

Within the realm of digital marketing, spending on display — videos, sponsorships, banners, and other display formats — will surpass search in 2016 for the first time, accounting for 47.9% of digital ad spending at a total spend of $34.56 billion. Display spend is expected to increase tremendously through 2020 because of continuing shift towards programmatic advertising, cross-device targeting and measurement. These trends, in combination with advancements in addressing ad fraud and viewability metrics, will all contribute in total display spend reaching $56.63 billion — or 50% of all digital ad budgets — by 2020.

In 2016, mobile advertising grew by 45%, significantly higher than the 38% growth projected by eMarketer’s March 2016 report. In accordance with this massive growth, more than 222.9 million people will be using smartphones by the end of 2017. Because more than two-thirds of people in the U.S. will be carrying screens with them at all times, mobile advertising will balloon in 2017 to $57.44 billion, accounting for 23.5% of all advertising spend.

Desktop advertising will not enjoy the same rosy future, and it’s projected that spending on desktop will fall further and further behind its mobile counterpart. 2015 saw the closest margin, with mobile outpacing desktop 53% to 47%. The disparity will grow in 2017, with mobile expected to receive 69.3% of total digital ad spending compared to desktop’s 30.7%.

These increases in digital ad spending will affect every industry, from retail, to insurance, to health and pharmaceuticals. The biggest growth will come from the entertainment industry (17.2% increase) in 2017, with automotive (16.6%) and consumer goods (16.1%) following close behind.

Optimizing Digital Advertising

Because companies are set to spend big on digital advertising in 2017, it’s crucial to properly allocate advertising budgets in order to maximize engagement. The days of individual employees crunching numbers and analyzing data to determine when, where, and how to purchase media are long gone.

AI-driven autonomous marketing platforms such as Albert™ from Adgorithms take the guesswork out of paid, unpaid, and owned media campaigns and replace it with predictive analytics, deep learning, proprietary algorithms, and natural speech processing. Autonomous platforms detect patterns, draw conclusions, and adjust performance without the need for immediate human intervention.

Perhaps most crucially of all, advertising teams who have been freed from the need to spend hours A/B testing, processing analytics, targeting audiences, and purchasing media will be able to focus their energies on the creative work they were hired to do. As digital advertising takes the lead in 2017, you should ensure that your advertising team is up to speed with the latest digital advertising technology.