U.S. digital display ad spending expected to overtake search in 2016

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Digital display ad spending is expected to overtake search ad spending this year in the United States for the very first time, says a new report from eMarketer entitled “US Digital Display Advertising Trends: Eight Developments to Watch for in 2016.”

The report suggests that the combination of video, native ads, traditional banners and other rich media will represent the greatest share (47.9 percent) of digital ad spending this year. It’s projected to be worth about $32.17 billion.

Peering inside the details of the report, the categories of rich media and video will both garner the biggest growth: 36.4% and 28.5%, respectively. The former will benefit from adopting out-stream and in-feed video ad formats, and the latter will gain from publishers taking advantage of in-stream video ad inventories.

The largest beneficiaries from digital video ad spending will be desktops and smartphones.

What’s driving this adjustment in digital advertising? Study authors note that the advancement in measuring mobile ads, increased use of mobile devices and immense consumption of content from smartphones and tablets are leading the way to change in this realm.

No longer will digital markets be spending vast sums of their budgets on search engines. Instead, their dollars will be allocated to publishers.

Don’t pity search

Although search advertising is receiving less attention, it isn’t going to suffer. This year, search ad spending is expected to grow by 10 percent – that number will surge 39 percent to $40.6 billion in 2019. Moving forward, brands are likely to insert more of their money into both display and search ads.

“On the one hand, numbers like these reveal a vibrant market in which consumer-led media habits (particularly increases in video consumption and mobile device usage) are funneling display ad dollars to the most desired channels and formats,” eMarketer wrote in its report.

In the end, this has been the trend for the last couple of years: display eclipsing search. eMarketer’s data from last year suggested that social, video, programmatic marketplaces and mobile ads were major factors in display throughout 2015.

“When you can put $X in and get some multiplier of $X out, you’ll be a popular member of the marketing team because you get to use real revenue terms instead of marketing terms such as impressions, views, and engagements,” said VentureBeat Insight analyst Jon Cifuentes in a statement. “Rich display, banners, and even video theoretically see broad reach across channels but are typically ‘brand-building’ exercises — a less-popular board room term than revenue.”

What About Google?

Search engine juggernaut Google presently accounts for 55 percent of global search ad spending. Or, in terms of dollars, earns just under $45 billion.

If search ad spending were to drop then that will mean less revenue for the tech titan. Although it maintains other forms of revenue, like YouTube and other businesses, Google could see its dominance taken over by Facebook, which has a strong display ad business model.

Already, Facebook’s automated ad platforms are posing a tremendous threat to Google.

Re/code‘s Mark Bergen opines:

“Google knows this — that the tremendous profitability of its search business will peter out eventually. Hence the importance of Alphabet: It is scouring for some business after search.”

Canada’s Advertisers Embrace Search

Last year, eMarketer concluded in a report, entitled “Canada Mobile Search: Marketers Shift Investments to Follow User Behavior,” that it’s all about search in the Great White North.

Not only are brands shifting their budgets to mobile devices, marketers are also spending big on search ads. Last year, mobile search ad spending hit $803 million, an increase of 65.3 percent from the year before.

One of the reason why search is bigger in Canada than in the U.S. is because display ads are diverse, and search engines are utilized far more by consumers.

Overall, digital ad spending in Canada hit $4.36 billion in 2015, a 15 percent jump from 2014.

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Andrew Moran

Andrew Moran is a full-time professional writer and journalist, who covers the areas of business, economics and personal finance. He has contributed to Benzinga, Capital Liberty News, Career Addict, Money Morning and PFHub.