With increasing scrutiny on how advertising platforms use consumer data, the days of hypertargeting are numbered. As a result, one may believe that ad prices and, consequently, ad spending will need to decline. Forrester disagrees. We expect annual digital media spending in the US to grow by nearly $50 billion over the next five years. In our recently published report, “The US Digital Marketing Forecast, 2018 To 2023,” my colleague Shar VanBoskirk and I lay out a variety of factors that will propel digital media spending. The surprise? Many of them do not presume more invasive targeting.
- Search ads depend on intent. Despite its maturity, paid search will be responsible for a large chunk of digital ad growth. Google is seeing strong search growth on mobile, and Amazon will draw from shopper marketing budgets. Because search is primarily intent-based, it does not depend heavily on user-specific targeting.
- Social can pull multiple growth levers. Banner and outstream video ads will contribute the most to growth in dollar terms, primarily due to social media. It’s true: Social depends heavily on personal information to serve targeted ads. But there are other ways that social can continue to grow without becoming more invasive. A shift from traditional banner ads to more engaging formats such as video ads, dynamic ads, and carousel ads will help boost ad prices. And new tools to make advertising more accessible to Facebook’s 90 million small businesses will help to raise advertising demand — particularly from emerging direct-to-consumer companies that rely on digital media for fuel.
- Instream video ads can leverage context and interactivity. Ads injected into online video content, which we refer to as instream video ads, will have the highest growth rate over the next five years. Driving this growth will be users’ hunger for more online video content and innovations from media companies to better cater to this demand. Because instream video ads are paired with specific video content, marketers can leverage this content’s rich contextual clues to serve more relevant ads without needing to gather personal information through more intrusive means. What type of video a person is watching can help marketers infer key information about that viewer’s likely demographic, preferences, and state of mind. On top of this, online video ads can be interactive. Viewers can tell marketers directly whether an ad is relevant, rather than marketers trying to use reams of personal information to infer relevance.
Don’t get me wrong. Growing privacy concerns and potential regulation will create headwinds for future digital media spend, as will marketers’ efforts to reduce wasted ad spend, consumers’ adoption of ad-free services, and the increasing availability of marketing tactics besides paid media. As a result, our expected five-year compound annual growth rate of 9% is down from 11% in our previous forecast. But as our report shows, there are still plenty of reasons to remain optimistic.
For more detail, see the full report, “The US Digital Marketing Forecast, 2018 To 2023.” And for a deeper dive into the forces driving spending within specific ad channels, check out the ForecastView reports listed below.
Also, see what Shar VanBoskirk has to say about this research here.