Advertisers Park Digital Dollars And Wait For Consumers To Catch Up Online

Apparently brands will dump more advertising dollars into digital as they hang out and wait for consumer to arrive and spend in online channels. The PricewaterhouseCoopers (PwC) annual Global Entertainment and Media Outlook 2014-2018 released Wednesday forecasts that U.S. advertising will outpace consumer spending as brands move more dollars to digital. Are advertisers taking a build-it-and-they-will-come approach?

PwC forecasts digital that E&M spending will take nearly $2 out of every $3, accounting for 65% of global entertainment and media spending growth by 2018. Excluding the amount spent on Internet access, digital E&M should climb at a 12.2% CAGR between 2013 and 2018.

Overall, PwC estimates that spending on entertainment and media (E&M) will reach $2.3 trillion by 2018, up from $1.8 trillion in 2013, growing at a compound annual growth rate (CAGR) of 5%. The U.S. will take the largest share of overall spend in this segment, climbing at 8% CAGR to $724 billion by 2018, up from $573 billion in 2013. Digital spending in the U.S. will grow at 11.2% CAGR during the next five years, accounting for 45% of overall U.S. E&M growth in spending, up from 33% in 2013. Amazing, but true -- U.S. digital advertising will contribute 40% of the total advertising growth by 2018.

When it comes to online sales, ecommerce will account for just 6.4% of the $4.73 trillion in total U.S. retail sales expected this year, per eMarketer, The analysis firm notes that sales alone do not tell the whole story of U.S. retail ecommerce. While consumers may not always buy online, they do shop through digital channels. Of the 219.4 million Internet users in the U.S. ages 14 and older, eMarketer expects that 196.6 million -- or 89.6% -- will shop online this year, compared with 163.2 million who will go on to complete a purchase digitally.

Consumers are moving to mobile too, but some reports suggest they're not moving as fast as advertising dollars. It may take a few more years for consumers to catch up. PwC's findings also reflect a move to mobile. PwC predicts that 86% of the U.S. population should use the mobile Internet by 2018, which will help drive digital advertising to take 40% of the total advertising revenue by 2018, up from 17% in 2009. Internet advertising in the U.S. will grow at a 9% CAGR, compared with a total advertising CAGR of 3.7%, respectively.

Video content will continue to increase in importance. In the past six years video's share of overall Internet advertising revenue more than doubled to 7%. PwC predicts video Internet advertising revenue will grow at a 19.5% CAGR to reach $6.77 billion by 2018, up from $2.78 billion in 2013.

As an extension of more traditional channels, online TV advertising will more than double its share of total TV advertising revenue, growing at a 16% CAGR to increase from $2.8 billion in 2013 to $5.9 billion in 2018.

And more consumers are reading magazines online. PwC estimates digital consumer magazine advertising revenue will rise by an average of 19.2% a year from $3.15 billion in 2013 to $7.6 billion in 2018. Digital circulation revenue will come in at $1.45 billion in 2018.

Video games advertising revenue will continue to reach $1.63 billion in 2018 from $921 million in 2013, at a CAGR of 12.1%.

"Businessman Sitting On Park Bench" photo from Shutterstock.


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1 comment about "Advertisers Park Digital Dollars And Wait For Consumers To Catch Up Online".
  1. Greg Peverill-Conti from InkHouse , June 4, 2014 at 12:24 p.m.
    I'm curious, are brands still waiting for their TV spend to result in an uptick in sales on the Home Shopping Network?