NEW MEDIA INSIGHTSFOR LOCAL ADVERTISERS

Digital advertising continues to prove its value for retailers, considering they are forecast to spend $28.33 billion for it during 2019, a 19.1% YOY increase. Not an inconsiderate amount compared to eMarketer’s prediction of $129.34 billion for total 2019 US digital ad spending.

With e-commerce retail sales projected to increase 14.0% to $586.92 billion, compared to just a 1.8% increase at brick-and-mortar stores, retailers realize they need the digital ad channel just as much as any other to drive online and in-store sales.

As we’ve often stated in many Media Group Online reports, digital media is not only the best complementary media for TV, but also all other media to reinforce brand recognition, product diversity and customer service and create a more personalized consumer experience.

eMarketer doesn’t just predict a 19.1% increase in retailers’ total 2019 digital ad spending, but more than 67% will be allocated to mobile, as spending in that channel will continue to increase at a 20%+ rate.

Retailers have always (those that are successful) followed a basic tenet of advertising: spend your ad dollars in the media consumers prefer – and their spending a large portion of their daily media interaction on a smartphone.

According to the latest Nielsen Total Audience Report (Q3 2018), US adults were spending 2 hours, 31 minutes a day on the Web or an app on a smartphone. Add another 43 seconds for on the Web or an app via a tablet.

Smartphone interaction is the second largest portion of the daily average of 10 hours, 30 minutes, with Live TV first at 3 hours, 44 minutes. Combine smartphone and tablet and the total of 3 hours, 14 minutes is 87% more than radio’s daily usage, or 1 hour, 44 minutes.

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Digital Advertising: Expenditures and Revenues

US Digital Ad Spending, 2018–2023

YEAR TOTAL % CHANGE% OF ALL

MEDIA AD SPENDING

2018 $108.64 B +22.9% 48.6%

2019 $129.34 B +19.1% 54.2%

2020 $151.29 B +17.0% 58.5%

2021 $172.29 B +13.9% 62.3%

2022 $187.77 B +9.0% 64.8%

2023 $201.83 B +7.5% 66.8%

eMarketer, February 2019

Retail Industry Mobile Ad Spending, 2016–2020

YEAR TOTAL % CHANGE

2016 $10.30 B ---

2017 $12.50 B +21.4%

2018 $15.80 B +26.4%

2019 $19.41 B +22.9%

2020 $23.61 B +21.6%

eMarketer, February 2019

Sources: Nielsen Website, 7/19; Marketing Dive Website, 7/19; eMarketers Website, 7/19; IAB Website, 7/19.Prepared: July 2019© 2019 Media Group Online, Inc. All rights reserved.

Measuring Digital Advertising by RevenuesAccording to the IAB Internet Advertising Revenue Report for 2018, total digital revenues increased 21.8% to a total of $107.5 billion. The holiday season generated Q4 2018 revenues of $31.4 billion, or 29.2% of the annual total.

It should be no surprise that retailers are expected to spend more than 67% of their total 2019 digital ad budgets on mobile, as mobile ad revenues increased 39.7% during 2018, to $69.9 billion, which is 65.0% of all Internet ad revenues.

2016 was the first year mobile ad revenues exceeded desktop, and the gap has been increasing ever since.

Although total revenues for digital video is a relatively small percentage of total 2018 Internet ad revenues, it increased 37.2% from 2017 to 2018, to a total of $16.2 billion. Just as with mobile overall, digital video ad revenues were $10.2 billion of the $16.2 billion total (with the remainder of $6.0 billion from desktop video), a whopping 65.2% increase from 2017.

Social media ad revenues refuse to take a back seat to mobile, as 2018 revenues increased 30.6% to $28.9 billion. As more consumers purchase smart speakers and the listenership of podcasts increases significantly, digital audio revenues increased a healthy 22.9% during 2018, to a total of $2.25 billion.

2018 Internet ad revenues may have increased significantly over 2017, but the formats generating those revenues didn’t change much at all from 2017 to 2018, and during Q4, specifically.

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Desktop vs. Mobile Internet Ad Revenues, 2014–2018

YEAR TOTAL DESKTOP TOTAL DESKTOP SHARE MOBILE TOTAL MOBILE SHARE

2014 $49.5 B $37.0 B 74.7% $12.5 B 25.2%

2015 $59.6 B $38.9 B 65.3% $20.7 B 34.7%

2016 $72.6 B $35.9 B 49.4% $36.7 B $50.6%

2017 $88.3 B $38.2 B 43.3% $50.1 B 56.7%

2018 $107.5 B $37.6 B 35.0% $69.9 B 65.0%

IAB/PwC, May 2019

Internet Advertising Revenues, by Format, 2017 and 2018

FORMAT ANNUAL TOTALS Q4 TOTALS

2017 2018 2017 2018

Search 46% 45% 44% 44%

Banner 31% 31% 32% 31%

Video 13% 15% 14% 16%

Other 9% 9% 10% 9%

IAB/PwC, May 2019