Digital Ads Represent Half of U.S. Advertising Sales for the First Time, Report Says

Advertisers are spending more money on online sites like Google and Facebook, pushing digital ads to represent more than half of U.S. ad sales for the first time, according to a report released Thursday.

This year, the nation’s advertisers will spend $106 billion in digital ads, up 16 percent from a year ago, according to Magna, a division of IPG Mediabrands.

Advertisers are increasing their spending in this category because they are eager to reach younger consumers increasingly tied to their smartphones. Additionally, the lower cost of online ads has made it more attractive to businesses that may be priced out of more expensive TV spots, analysts said.

And more small businesses are putting money into social media and search ads, said Vincent Letang, a Magna executive vice president of global market intelligence.

“The development of these new digital marketing tools creates new demand,” Letang said. “It’s new money growing the advertising pie.”

Google and Facebook lead the nation’s digital ad sales, representing a 58 percent market share combined, according to research firm eMarketer. Google, which operates services like YouTube and Search, is the leader with a 37 percent market share, eMarketer said.

Unlike traditional TV ads, ads on sites like Google and Facebook can give marketers more detailed information about their audiences. Businesses could target their ads based on gender, an age range, or user interests on Facebook. Marketers could also learn exactly how long a viewer watched their video ad online on sites like YouTube.

“Digital is a lot more sophisticated at delivering those metrics,” said Paul Verna, an eMarketer principal analyst.

While digital ad spending is expected to increase 11.8 percent in 2019, ad sales for national and local TV ads will decline, according to Magna’s report. Local TV sales will decline 4.5 percent in 2019, and national TV sales will drop 1.5 percent, excluding cyclical events like the Olympics or political elections, according to the report.

While some consumer products have opted to market their items online first rather than through TV spots, digital ad sale growth isn’t primarily due to TV ad dollars moving to Google and Facebook, Letang said. He points out that Google and Facebook themselves have paid for TV ads.

“Taking budgets away from TV is not the primary growth engine,” Letang said.

(Article written by Wendy Lee)