How Is The Online Advertising Market Positioned In The US?
The digital advertising market in the US is booming and has grown exponentially over the last few years. The rising Internet penetration in the country and increasing dependence on the World Wide Web for varied everyday activities such as video streaming, travel, and movie bookings, accessing social media, financial transactions and more has stimulated the shift towards online advertising. The shortcomings of the traditional mediums such as inability to target the right audience, traceability, and higher costs have been the major reasons for advertisers shifting towards internet ads.
The number of internet users in the country reached ~ million in 2018, accounting for ~% of the total population, while smartphone penetration was recorded to be ~% of the population. The rising internet and smartphone penetration have been one of the major growth drivers for the rising digital advertising expenditure in the country. The US also has a well-developed internet infrastructure. The mobile internet speed was recorded to be the 9th best globally in 2018. The advances in internet access, bandwidth and speed have positively impacted the growth of digital advertising in the country.
Spurring social media usage has also significantly contributed to the rise of digital advertising in the country. The number of active social media users reached 230 million in 2018. The period also witnessed the rise of new ad formats on social media including social stories or 10-second ads, influencer marketing and more.
Advertisers have seen shifting towards digital mediums due to added advantages such as better monetization, proper reach measurement tools, availability of insights and analytics and more.
The adoption of the latest technologies such as Artificial Intelligence, GPS and Radio Frequency, Machine Learning, Big Data among others in recent years have made internet ads more efficient and improved their targeting to the relevant audience. Owing to these factors, the online advertising market witnessed a positive double-digit CAGR of ~% over the review period 2013-2018.
Us Advertising Market
The ad spending on traditional advertising accounted for the majority share in the US advertising market in 2018. Digital advertising expenditure has grown exponentially over the review period and is projected to surpass traditional advertising in the near future owing to the rising internet penetration in the country.
Us Online Advertising Market Segmentation
By Medium: In 2018, digital advertising expenditure on mobile devices dominated the market with a share of ~%. This is majorly due to the shift in consumer preference towards mobile devices for different type of activities such as watching videos, informational searches, accessing social media and others. Desktop advertising accounted for the remaining ~% market share in ad expenditure in 2018 due to the declining usage of desktops.
By Type: Search advertising dominated the digital advertising market in the US in 2018 owing to the rise of e-commerce in the country. Social media advertising accounted for the second-highest share in ad spending due to the inclining social media usage in the country. Other types of advertisements such as display, video, audio and others accounted for the remaining market share.
Segmentation by Medium (Desktop and Mobile): In 2018, mobile digital advertising dominated the ad spending in most types of advertising with a market share of ~% in Search, ~% in Social Media,~% in Display, ~% in Audio and ~% in Others. Desktop usage in the country is declining as most of the consumers prefer to use mobile devices for the majority of online activities due to easy access and faster mobile internet speeds.
By Sectors: The retail sector was analyzed to account for the highest digital advertising expenditure in the US in 2018 primarily due to the rise of online shopping in the country. Automotive and Financial Services industries also contributed significantly to the digital ad spending. Telecommunications, Leisure Travel and FMCG sector also accounted for a significant share in the digital advertising expenditure in the country as most consumers search for products online before actually making purchases. Other sectors including Electronics & Computers, Pharmaceuticals/Healthcare, Media & Entertainment, and others accounted for the remaining share in digital ad spending.
By Ad Buyers: Majority of the digital ad buying in the US took place through ad agencies in 2018 due to the expertise of these agencies in managing ad campaigns. Direct ad buying by brands accounted for a meager share in the digital advertising expenditure due to the lack of technological infrastructure and talented professionals by the brands.
By Pricing Model: Performance pricing models including CPC, CPA among others received the maximum digital advertising expenditure in the US in 2018. The CPM and hybrid models accounted for the remaining digital ad expenditure and were preferred by advertisers who aimed wider reach.
Comparative Landscape In Us Online Advertisement Market
Competition within the US online advertising market was observed to be fragmented with multiple advertising agencies operating in the space. Most of these advertising agencies are held by the top 5 holding companies namely WPP Plc, Interpublic Group of Companies, Omnicom Group, Publicis Groupe and Dentsu Inc, that accounted for the maximum share in the digital advertising expenditure in the US in 2018 in terms of billings. These companies are competing on parameters such as pricing of the services offered (average hourly rate), major clientele, flexibility, minimum project size, and service portfolio. On the other hand, competition within online platforms or publishers was observed to be concentrated among the big players such including Google and Facebook.
Competition Analysis of Major Platforms: Facebook is the most dominant social media platform in social media advertising with a percentage share of ~%. Instagram also garnered a significant share of ~% in 2018. Facebook and Instagram together accounted for the majority share in social media advertising. YouTube accounted for a major share of ~% of advertising spend on Video advertising as it is the most popular platform for video streaming in the US. The remaining share was captured by other video platforms including Twitch, TikTok and more. In search advertising, Google acquired the maximum ad spending with a share of ~% as it is the most used search engine in the country. The remaining share was captured by Yahoo & Bing, Amazon and others.
Us Online Advertising Market Future Outlook and Projections
The US online advertising market is estimated to grow at a positive double-digit CAGR during the forecast period 2018-2025. Expenditure on online advertising by major companies is further expected to increase due to rising internet and smartphone penetration. The introduction of 5G internet technology is further projected to propel the market with the introduction of new interactive ad formats. The growth of social media usage in the country coupled with the adoption of the latest technologies such as Artificial Intelligence, Augmented and Virtual Reality among others is anticipated to positively affect the market. Apart from that, the rising data privacy concerns and implementation of the California Consumer Privacy Act is also expected to substantially impact the digital advertising space in the US.
Key Segments Covered:-
By Type (On the Basis of Ad Expenditure)
Digital Advertising Market
Traditional Advertising Market
By Medium (On the Basis of Ad Expenditure)
Desktop Advertising
Mobile Advertising
By Type of Advertisement (On the Basis of Ad Expenditure)
Search Advertising
Social Media Advertising
Display Advertising
Video Advertising
Audio Advertising
Other Advertising (Native Advertising, Classifieds, Lead Generation, Buzz/Content Advertising, Email Marketing and more)
By Ad-Format on the Basis Of Platforms (On the Basis of Ad Expenditure)
Social Media Advertising
Others
Search Advertising
Yahoo & Bing
Amazon
Others
Video Advertising
YouTube
Others
Further Segmentation by Medium (Desktop and Mobile, On the Basis of Ad Expenditure),
2013-2018
Social Media Advertising
Mobile
Desktop
Video Advertising
Mobile
Desktop
Search Advertising
Mobile
Desktop
Audio Advertising
Mobile
Desktop
Other Advertising (Native Advertising, Classifieds, Lead Generation, Buzz/Content Advertising, Email Marketing and more)
Mobile
Desktop
By Sectors (On the Basis of Ad Expenditure)
Retail
Automotive
Financial Services
Telecommunications
Leisure Travel
Consumer Packaged Goods
Electronics & Computers
Pharmaceuticals/Healthcare
Media
Entertainment
Others (Real-Estate, Education, Agrochemicals, Energy, Construction and more)
By Ad-Buyers (On the Basis of Ad Expenditure)
Direct
Ad Agencies
By Pricing Model (On the Basis of Ad Expenditure)
Performance
Cost Per Mile
Hybrid
Key Target Audience:-
Advertising Agencies
Social Networking Platforms
End-User Industries Investing in Digital Advertising
Regulatory Bodies and Government Agencies
Investors
Time Period Captured in the Report:-
Historical Period: 2013-2018
Forecast Period: 2019-2025
Companies Covered in US Online Advertising Market:-
Major Ad Agencies
WPP
Interpublic Group of Companies
Publicis Groupe
Omnicom Group
Dentsu Inc.
Major Online Platforms
Google (including YouTube)
Facebook (including Instagram)
Amazon
Microsoft (including LinkedIn)
Verizon Media
Key Topics Covered in the Report:-
Advertising Industry US
US Cost per Click Ads Market
Online Advertising Market US
Major Advertising Agencies US
US Online Advertising Industry
US Digital Advertising Revenue
US Advertising Spending in 2018
US Search Ads Market Share
US Online Advertising Market
US Digital Ad Spending Market
US Online Ad Spending Market
Online Advertising Industry US
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Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
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