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

Transcription

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

2 Agenda 1. Overview: Global E&M macro trends 2. Internet advertising 3. Programmatic advertising 4. Use of agency PwC 2

3 Overview: Global E&M macro trends

4 Trending now: convergence, connections and trust Convergence E&M Outlook Report summary Connections Trust Global Entertainment & Media Outlook PwC 4

5 Convergence 3.0: A handful of factors combine, creating the momentum behind this new wave of convergence Drivers of convergence Ubiquitous connectivity Consumers and their devices are always connected, always on Data analytics and technology that can support better decisionmaking are critical to success Personalization Convergence 3.0 The mobile consumer Mobile devices are becoming the primary means of accessing E&M content and services Platforms rather than publishers are the primary beneficiaries of users growth in time and spending Value shift to platforms Need for new sources of growth Revenue streams that nourished companies in the past will not be flowing with the same force Source: PwC Global Entertainment & Media Outlook , PwC 5

6 Growth rates remain steady even as the industry is being transformed Global & China E&M CAGRs China 7.2% Projected industry growth : 8.3% Global 4.4% Projected industry growth : 4.2% A new wave of convergence Source: PwC Global Entertainment & Media Outlook , PwC 6

7 Consumer driven revenue remains the largest share through 2022, and access will move ahead of advertising by E&M revenue share: primary categories, Global 40% 35% 30% 25% 20% 15% 10% 5% 0% Advertising Access Consumer Global Mainland China Consumer revenue includes: Read: books, magazines, newspapers Listen: music, radio, podcasts Watch: TV, OTT, cinema Play: games, e-sports, virtual reality E&M CAGR: primary categories, Global 10% 8% 6% 4% 2% 0% Advertising Access Consumer Global Mainland China Access revenue includes: Mobile Internet, fixed broadband revenue Advertising revenue includes: B2B, Internet advertising OOH, TV advertising Source: PwC Global Entertainment & Media Outlook , PwC 7

8 Internet advertising

9 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 : US, China Revenue $bn USD US China Source: PwC Global Entertainment & Media Outlook , PwC 9

10 While overall Internet advertising growth continues globally, wired growth will taper particularly in mature markets Internet advertising revenue 2022: US, US$127bn Internet advertising revenue 2022: China, US$80bn 140, , , ,000 Revenue $bn USD 100,000 80,000 60,000 40,000 Revenue $bn USD 100,000 80,000 60,000 40,000 20,000 20, Mobile Wired Mobile Wired 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 China will surpass global growth at +20.1% CAGR Source: PwC Global Entertainment & Media Outlook , PwC 10

11 Mobile will dominate Internet advertising in China, representing 72% of revenues of US$80bn by 2022 Internet advertising revenue : US Internet advertising revenue : China Revenue $bn USD Mobile Display Paid Search Revenue $bn USD Mobile Display Paid Search 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 Source: PwC Global Entertainment & Media Outlook , Sinomonitor, emarkter PwC 11

12 Mobile will dominate Internet advertising in China, representing 72% of revenues of US$80bn by 2022 Digital activities 2017: China % of population Average daily time spent on mobile Video Social networks 42.0% 69.3% China 3:03 Newspapers 8.7% Magazines 4.9% US 2:37 Radio 3.5% 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 Source: PwC Global Entertainment & Media Outlook , Sinomonitor, emarkter PwC 12

13 Programmatic advertising techniques are growing in China, enabling display ad purchase efficiency and timeliness Programmatic direct advertising revenue: China, US Real-time bidding advertising revenue: China, US Revenue $bn USD Revenue $bn USD China US China US 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% Source: PwC Global Entertainment & Media Outlook , emarketer PwC 13

14 Programmatic advertising

15 A low programmatic penetration - especially for desktop - translates into a programmatic market size slightly larger the UK Programmatic penetration (as % of digital ad spend), 2017 In USD bn 78% Est. programmatic ad spend by channel and format, 2017, in % 16% Video display 20-25% 15-20% VIDEO DISPLAY PENETRATION 25% China (Consensus) US Programmatic ad spend, 2017 In USD bn 33 Non-video display 40-45% 15-20% NON-VIDEO DISPLAY PENETRATION 12% 7 China (Consensus) US Mobile MOBILE PROG. PENETRATION 20% Desktop 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 Source: emarketer (Oct 2017 for US, Dec 2017 for China), Analysys (Apr 2017), iresearch (Jun 2017), emarketer (Dec 2017), Magna (Sep 2015) PwC 15

16 Mobile and video will be the main driver for the programmatic ad spend growth going forward Programmatic ad spend breakdown by mobile vs. desktop, In USD bn 12 Programmatic ad spend breakdown by video vs. non-video, In USD bn USD bn % USD bn 55% % 58% % % Mobile Desktop 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% Source: iresearch, PwC Analysis PwC 16

17 Use of agency

18 Although most of the spend is done directly, MNCs are more likely to still use agencies China advertising spend breakdown by category, 2016, in USD bn MNCs usage of agencies in China, as a % of respondents, % 82% 83% 20% Non-agency 80% 23% 57% 59% 46% 80% Global agencies 77% 23% 15% 14% 7% 11% 11% 3% Total media spending Agency Non-agency Agency Local media agencies spending Global agencies Strategic Planning Internally Media Planning Advertising Agencies Media Agencies Digital Agencies Media Buying Note: Marketers also mentioned using BTL/MS Agencies and other companies to execute strategic planning, media planning and media buying on their behalf Most of the ad spend is bypassing agencies as brands increase investment in in-house marketing teams CO-FOUNDER, R3 CONSULTING However MNCs would typically retain agencies for their media planning and buying Source: R3 Worldwide, GroupM, emarketer PwC 18

19 Performance and transparency are the main differentiating factors when advertisers select adtech vendors Differentiating factors PERFORMANCE / ROI TRANSPARENCY Hygiene factors BRAND SAFETY / ANTI FRAUD INVENTORY ACCESS FEES Emerging factors INSIGHTS / FEEDBACK PwC 19

20 Thanks. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors PwC. All rights reserved. PwC refers to the China or Hong Kong member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details.