Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends...

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Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai

Transcript of Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends...

Page 1: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

Internet Advertising: Current and Future Trends2018 Mobile World Congress Shanghai

Page 2: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

PwC

Agenda

1. Overview: Global E&M macro trends

2. Internet advertising

3. Programmatic advertising

4. Use of agency

2June 2018

Page 3: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

Overview: Global E&M macro trends

Page 4: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. 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

Page 5: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

Page 6: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

Page 7: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

Page 8: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

Internet advertising

Page 9: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Rev

enue

$bn

USD

US China

Page 10: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

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80,000

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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

Page 11: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

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Rev

enue

$bn

USD

Mobile Display Paid Search

Internet advertising revenue 2013-2022: China

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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

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enue

$bn

USD

Mobile Display Paid Search

Page 12: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

Page 13: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

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Programmatic advertising

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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

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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

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2017 2019

USD

bn

Mobile Desktop

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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%

Page 17: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

Use of agency

Page 18: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

Page 19: Internet Advertising: Current and Future Trends · Internet Advertising: Current and Future Trends 2018 Mobile World Congress Shanghai . PwC Agenda 1. Overview: Global E&M macro trends

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

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Thanks.

This content is for general information purposes only, and should not be used as a substitute for consultation with professionaladvisors.

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