internet advertising: current and future trends · internet advertising: current and future trends...
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Internet Advertising: Current and Future Trends2018 Mobile World Congress Shanghai
PwC
Agenda
1. Overview: Global E&M macro trends
2. Internet advertising
3. Programmatic advertising
4. Use of agency
2June 2018
Overview: Global E&M macro trends
PwC
Global Entertainment & Media Outlook
4
Trending now: convergence, connections and trust
Connections Trust
Convergence 3.0
2018E&M Outlook
Report summary
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook
5June 2018
Convergence 3.0: A handful of factors combine, creating the momentum behind this new wave of convergence
The mobile consumer
Need for new
sources of growth
Value shift to
platforms
Personalization
Ubiquitousconnectivity
Consumers and their devicesare always connected, always on
Mobile devices are becoming the primary means of accessing E&M content and services
Revenue streams that nourished companies in the past will not be flowing with the same force
Platforms rather than publishers are the primary beneficiaries of users’ growth in time and spending
Data analytics and technology that can support better decision-making are critical to success Convergence
3.0
Drivers of convergence
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook
6June 2018
Growth rates remain steady even as the industry is being transformed
Global & China E&M CAGRs
Projected industry growth 2017—2022
7.2%China
Projected industry growth 2017—2022
4.4%Global
2017: 8.3%2017: 4.2%
A new wave of convergence
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook
7June 2018
Consumer driven revenue remains the largest share through 2022, and access will move ahead of advertising by 2022
2022 E&M revenue share: primary categories, Global
2017-2022 E&M CAGR: primary categories, Global
• Consumer revenue includes:– Read: books, magazines, newspapers– Listen: music, radio, podcasts– Watch: TV, OTT, cinema– Play: games, e-sports, virtual reality
• Access revenue includes:– Mobile Internet, fixed broadband revenue
• Advertising revenue includes:– B2B, Internet advertising– OOH, TV advertising
0%
2%
4%
6%
8%
10%
Advertising Access ConsumerGlobal Mainland China
0%5%
10%15%20%25%30%35%40%
Advertising Access ConsumerGlobal Mainland China
Internet advertising
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook
9June 2018
China’s Internet advertising market was the second-largest market globally in 2017, after the US, with total revenue of almost USD $46bn
Segment revenue 2013-2022: US, China
0
20
40
60
80
100
120
140
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Rev
enue
$bn
USD
US China
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook
10June 2018
While overall Internet advertising growth continues globally, wired growth will taper particularly in mature markets
Internet advertising revenue 2022: US, US$127bn
• While wired remains the largest revenue source, the market will shift to mobile as consumers increasingly prefer mobile platforms
• Global mobile revenues are expected to grow to $210bn USD in 2022, a CAGR of +15.4%
• China mobile growth will exceed global projections as mobile Internet penetration increases
• As the market matures, YoY growth will be strong but stable through 2022. China will surpass global growth at +20.1% CAGR
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Rev
enue
$bn
USD
Mobile Wired
Internet advertising revenue 2022: China, US$80bn
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Rev
enue
$bn
USD
Mobile Wired
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook, Sinomonitor, eMarkter
11June 2018
Mobile will dominate Internet advertising in China, representing 72% of revenues of US$80bn by 2022
Internet advertising revenue 2013-2022: US
• Mobile Internet advertising growth drivers include video-on-demand, live streaming, and online shopping• The convenience and increasing adoption of mobile payments are also fuelling mobile Internet advertising
0
20
40
60
80
100
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Rev
enue
$bn
USD
Mobile Display Paid Search
Internet advertising revenue 2013-2022: China
0
10
20
30
40
50
60
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Rev
enue
$bn
USD
Mobile Display Paid Search
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook, Sinomonitor, eMarkter
12June 2018
Mobile will dominate Internet advertising in China, representing 72% of revenues of US$80bn by 2022
• Social media is also very popular, with Tencent’s WeChat boasting over 0.9bn active users in China• Mobile Internet users in China are highly engaged, spending 3 hours a day on mobile activities – prime advertising targets
Average daily time spent on mobile
2:37
3:03
US
China
Digital activities 2017: China % of population
3.5%
4.9%
8.7%
42.0%
69.3%
Radio
Magazines
Newspapers
Social networks
Video
PwCSource: PwC Global Entertainment & Media Outlook 2018-2022, www.pwc.com/outlook, eMarketer
13June 2018
Programmatic advertising techniques are growing in China, enabling display ad purchase efficiency and timeliness
• Baidu, Alibaba, Tencent and Toutiao continue to dominate the programmatic advertising landscape
• Consumers are increasingly spending more time on digital platforms
• In 2017, programmatic direct deals accounted for 63.5% of all programmatic display ad spending in China
• Real-time bidding (RTB) accounted for 36.5%
Real-time bidding advertising revenue: China, USProgrammatic direct advertising revenue: China, US
05
10152025303540
2016 2017 2018 2019Rev
enue
$bn
USD
China US
05
10152025303540
2016 2017 2018 2019Rev
enue
$bn
USD
China US
Programmatic advertising
PwC 15June 2018
A low programmatic penetration - especially for desktop -translates into a programmatic market size slightly larger the UK
16%
78%
USChina(Consensus)
Source: eMarketer (Oct 2017 for US, Dec 2017 for China), Analysys (Apr 2017), iResearch (Jun 2017), eMarketer (Dec 2017), Magna (Sep 2015)
Programmatic penetration (as % of digital ad spend), 2017In USD bn
7
33
USChina(Consensus)
Programmatic ad spend, 2017In USD bn
Non-videodisplay
Videodisplay
Desktop
15-20%
15-20%
Mobile
40-45%
20-25%
Est. programmatic ad spend by channel and format, 2017, in %
VIDEO DISPLAY PENETRATION25%
NON-VIDEO DISPLAY PENETRATION12%
MOBILE PROG. PENETRATION
20%
DESKTOP PROG. PENETRATION
12%
• China’s programmatic penetration is much lower than US in 2017
• Mobile platform accounts for the largest share of programmatic ad spend in China
PwC 16June 2018
Mobile and video will be the main driver for the programmatic ad spend growth going forward
Programmatic ad spend breakdown by mobile vs. desktop, 2017 - 2019In USD bn
58%
67%
33%
43%
57%
55%
Programmatic ad spend breakdown by video vs. non-video, 2017 - 2019In USD bn
Source: iResearch, PwC Analysis
0
2
4
6
8
10
12
2017 2019
USD
bn
Mobile Desktop
0
2
4
6
8
10
12
2017 2019
USD
bn
Video Non-video
• Mobile programmatic is expected to grow rapidly with 30% CAGR and doubling Desktop
• Desktop programmatic is expected to growth at 9% CAGR while mobile will growth at 33% CAGR
• Non-video programmatic display is likely to regain market share
• Non-video programmatic is expected to growth at 25% CAGR while video will growth at 20%
Use of agency
PwC 18June 2018
Although most of the spend is done directly, MNCs are more likely to still use agencies
Agency media spending
Global agencies23%
Total media spending
Non-agency80%
China advertising spend breakdown by category, 2016, in USD bn
Source: R3 Worldwide, GroupM, eMarketer
CO-FOUNDER, R3 CONSULTING
7%
46%
3%
83%
14%
57% 59%
Strategic Planning Media Buying
87%
Media Planning
11% 11%15%
82%
Digital AgenciesInternally Media AgenciesAdvertising Agencies
Note: Marketers also mentioned using BTL/MS Agencies and other companies to execute strategic planning, media planning and media buying on their behalf
MNCs usage of agencies in China, as a % of respondents, 2016
20%
80%
Agency Non-agency
77%
23%
Local agencies
Global agencies
• Most of the ad spend is bypassing agencies as brands increase investment in in-house marketing teams
• However MNCs would typically retain agencies for their media planning and buying
PwC 19June 2018
Performance and transparency are the main differentiating factors when advertisers select adtech vendors
PERFORMANCE / ROI
TRANSPARENCY
Differentiating factors
BRAND SAFETY / ANTI FRAUD
INVENTORY ACCESS
FEES
Hygienefactors
INSIGHTS / FEEDBACKEmerging
factors
Thanks.
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