The Digital Advertising Stats You Need for 2018

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Cordelia Bailey
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1 The Digital Advertising Stats You Need for 2018

2 Intro 2017 was another big year for advertisers, publishers, and ad tech providers. We saw the continued dominance of clientside header bidding as well as the advent of server-to-server; the announcement of a new ad tech consortium to make cookieless, cross-device targeting a reality; a promising industry response to fraud in the form of ads.txt; and the beginnings of a potential machine learning revolution in ad tech. But if there s one thing that s clear about our industry, it s this: Change is the rule, not the exception so, you can expect a whole lot more of it in In order to help you prepare, we ve compiled this data-driven guide. Inside, you ll find the numbers, charts, and graphs you need to refine your 2018 strategy, including information on emerging formats, header bidding adoption, the state of the duopoly, and more! Read on, arm yourself with knowledge, and get ready for a productive 2018!

3 Table of Contents The U.S. Digital and Programmatic Landscape Digital Advertising Around the World Video Native Mobile Ad Fraud Machine Learning and AI Header Bidding Duopoly

4 The U.S. Digital and Programmatic Landscape 4

5 Total Projected U.S. Digital Ad Spend Digital Ad Spending (billions) Percent of Total U.S. Ad Spend $140 $ % Some good news: Digital ad spend continues to rise and take up a bigger share of all ad dollars. By 2021, digital ad spend is expected to represent a majority of all U.S. ad spend. Total Spend (Billions) $120 $100 $80 $60 $40 $20 $0 $ $ % $ % $83.00 $ % $ % 40.48% 36.71% 32.70% % 45% 40% 35% 30% Percent of Total U.S. Ad Spend Source: emarketer 5

6 Total Projected U.S. Programmatic Ad Spend (Display) Programmatic Digital Ad Spending (billions) Percent of Total Digital Display Ad Spend $50 $ % Even better, 2017 saw total programmatic spend increase more and take up a bigger piece of the total digital pie, though growth seems to be levelling off. Total Spend (Billions) $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 $39.10 $32.56 $ % 81.50% $ % 73.00% 65.00% % 90% 85% 80% 75% 70% 65% 60% Percent of Total U.S. Digital Display Ad Spend Source: emarketer 6

7 U.S. Desktop Display Viewability Rates by Ad Size 300x % 160x % 300x % Ad Size 970x66 970x % 62.00% Total viewability for desktop display ads is 53.6%, meaning that nearly half of all display ads purchased are never seen by anyone. Source: emarketer 970x90 300x x % 52.90% 49.80% 0% 10% 20% 30% 40% 50% 60% 70% 80% In-View Rate 7

8 U.S. Display Ad Click-Through Rates by Format 0.08% Enhanced Banner 0.08% Custom In-Page 0.06% Rich Media 0.07% Image Enhanced banner and custom in-page ads attract the most clicks in the display category. 0.03% HTML Banner 0.05% Flash In-Page Source: emarketer 8

9 Digital Advertising Around the World 9

10 Projected Digital Ad Spend by Country: 2017 vs (Markets of $7B and above) Of the top five digital ad markets, China is expected to see the most growth in 2018 at 13.9% $100 $80 $86.39 $97.16 Total Spend (Billions) $60 $40 $44.59 $50.76 $20 $14.70 $16.17 $12.32 $13.06 $7.73 $8.23 $0 US China UK Japan Germany Source: PWC Outlook 10

11 Projected Digital Ad Spend by Country: 2017 vs Digital ad spend in Indonesia is expected to grow a whopping 27.8% in Other countries expecting substantial growth are Mexico at 17.4%, Russia at 13.8%, and Brazil at 12.8%. (Markets between $1B and $7B) $7.00 $6.76 $6.00 $5.66 $6.20 $5.15 Total Spend (Billions) $5.00 $5.24 $4.00 $4.57 $4.77 $4.20 $3.00 $2.56 $2.26 $2.38 $2.21 $2.22 $2.00 $2.27 $2.14 $2.09 $1.00 $2.03 $2.00 $2.01 $1.86 $1.90 $1.67 $1.50 $1.48 $1.48 Indonesia Switzerland $1.34 $1.38 $1.28 $1.25 $1.23 Mexico Denmark Hong Kong $0.00 Australia Source: PWC Outlook South Korea Canada France Brazil Italy Russia Netherlands Sweden Spain 11

12 Projected Digital Ad Spend by Country: 2017 vs (Markets below $1B) While all of these countries had relatively low digital ad spend in 2017, nearly all of them are expecting doubledigit growth in India especially stands out, with an expected 24.0% growth rate in 2018 and a population of over 1 billion potential consumers. $1.20 $1.00 $0.80 $0.60 $0.40 Total Spend (Billions) $0.20 Taiwan Norway Poland India Source: PWC Outlook Turkey Argentinaa Czech Republic Belgium New Zealand Austria Ireland Thailand Izrael Philippine Malaysia UAE Hungary Saudi Arabia Singapore Finland Greece Chile South Africa Colombia Portugal Kenya Egypt Peru Romania Nigeria Venezuela Vietnam Pakistan 12

13 How much will digital ad spend grow this year in each country? 2018 Projected Digital Ad Spend Growth by Country 40% 35% 30% 25% 20% 15% 10% 5% 0% Pakistan Egypt Indonesia Philippines Thailand Malaysia India Nigeria Vietnam Chile South Africa Portugal Mexico Venezuela Greece Romania UAE Saudi Arabia Colombia Argentina Kenya Peru Poland China Russia Singapore Ireland Hong Kong Brazil Israel US Switzerland Turkey Czech Republic Norway Hungary Sweden New Zealand UK Taiwan Australia Austria Netherlands France Belgium South Korea Canada Spain Denmark Germany Japan Italy Finland Source: PWC Outlook 13

14 Projected Digital Ad Spend by Region Through 2021 Looking at the broader regional trends, this is the year Asia-Pacific is expected to overtake North America as the world s leading destination for digital ad dollars. Asia Pacific North America Western Europe Latin America Central & Eastern Europe Middle East & Africa $ $ $ $ $80.00 $60.00 Total Spend (Billions) $40.00 $20.00 $ Source: emarketer 14

15 Video 15

16 Total Projected U.S. Programmatic Video Ad Spend Programmatic Digital Video Ad Spending (billions) $14.00 $ % Percent of Total Digital Video Ad Spending $12.00 $ % The last two years have seen a huge influx of dollars into the US programmatic video market. Growth is expected to continue, but at a slower pace in 2018 and beyond. Total Spend (Billions) $10.00 $8.00 $6.00 $4.00 $2.00 $ % 76.50% 74.00% 60.00% $9.13 $6.42 $ % % 60% 50% 40% 30% Percent of Total Digital Video Ad Spend Source: emarketer 16

17 Projected Share of Programmatic Video Ad Spend by Device, 2017 vs is the year mobile overtook desktop in programmatic video ad spend. The gap is expected to widen further in Desktop 45% Mobile 55% Desktop 42% Mobile 58% Source: emarketer 17

18 2017 Video Ad Benchmarks The completion benchmarks every video advertiser needs to know % Viewability Rate 70.67% Viewable Completion Rate 71.33% Completion Rate Source: emarketer 18

19 Video Ad Formats Users Report as Interruptive (U.S. Internet Users) Desktop Mobile Outstream 46% 60% Publishers and advertisers may want to be weary of mid-roll ads on both desktop and mobile as users are most likely to say they find them interruptive. Pre-roll Mid-roll 17% 53% 17% 72% Source: emarketer 19

20 Projected U.S. Viewership: Digital video vs. Broadcast TV, Digital Video Viewers Broadcast TV Viewers Cord-cutting: Through 2018 and beyond, people will be watching less broadcast TV and more digital video every year, fleeing broadcast for digital options, including Over-The-Top (OTT) content via Connected TV (CTV) devices. $250 $ Total Spend (Millions) $150 $ $50 $ Source: emarketer 20

21 Average Time per Day Spent with Video for U.S. Adults: TV vs. Digital Time per day (Hours:Minutes) TV Digital Video Consequently, as digital video grows, we re seeing users spend less and less time per day watching broadcast TV. 1:01 1:10 1:17 1:22 1:26 4:10 4:05 3:58 3:52 3: Source: emarketer 21

22 U.S. CTV Users by Device With over 168 million users in the U.S. alone, CTV keeps on growing. But which CTV devices are the cord-cutters flocking to? 81.2 $ $70 $ $50 $40 $30 $20 Device Users (Millions) $10 $0 Apple TV Blu-Ray Player Amazon Fire TV Google Chromecast Roku Connected Game Console Smart TV Source: emarketer 22

23 Native 23

24 Total Projected U.S. Native Ad Spend (billions) $16.21 $22.09 Native ad spend in the US is estimated to reach $28 billion in 2018, a 27.8% percent increase from % YoY Projected Increase $28.24 Source: emarketer 24

25 2017 Share of Total Native Ad Spend: Social Networks vs. All Other Native Display 15.84% All Other Native Ad Spend 84.16% Native Social Network Spend The vast majority of that spend goes to social networks. Native advertising on the open internet what most people probably think of when they think native accounted for just under $3.5 billion in spend. Source: emarketer 25

26 Click-Through Rates (CTR): All Display vs. Native Display 0.80% Native Display 0.09% All Display CTRs for native display ads are 8.8x higher than the average display ad. Source: emarketer 26

27 Native Ad Click-Through Rates by Brand Category 1.00% 1.10% 1.10% 0.80% 0.60% 1.00% 0.90% 0.90% 0.90% 0.80% 0.80% 0.80% 0.80% 0.75% 0.70% 0.70% 0.65% 0.65% 0.40% 0.20% 0.00% Pets Food & Drink Family & Parenting Travel Technology B2C Style & Fashion Home & Garden Finance & Insurance Entertainment CPG Business Education Automotive Sports Health & Fitness 0.50% Technology B2B Native ads have performed particularly well for advertisers in the Pets, Food & Drink, and Family & Parenting brand categories. B2C B2B Source: emarketer 27

28 Mobile 28

29 Total Projected U.S. Mobile Programmatic Ad Spend Programmatic mobile spend in the US continues to rise, and made up 74.1% of all programmatic display spend in That share is expectedto climb to 77.0% in $35 $36.09 $30 $30.09 $25 Total Spend (Billions) $20 $15 $17.99 $24.14 $10 $10.68 $5 $ Source: emarketer 29

30 U.S. Programmatic Mobile Ad Spend: In-App vs. Mobile Web 97% In-App 3% Mobile Web In-app ads dominate mobile programmatic ad spend. That shouldn t be a surprise considering the average U.S. consumer spends 89% of their time on their smart phone in-app. Source: Smaato 30

31 2017 U.S. Mobile Ad Spend by Ad Format Display, search, and rich media are the formats driving mobile ad spend. $30.25 $30.00 $25.69 $24.28 Total Spend (Billions) $20.00 $10.00 $5.96 $2.15 $0.00 Display Ads Search Rich Media Online Video Ads Other (cleassifieds/ , lead gen) Source: emarketer 31

32 Projected U.S. Mobile Ad Spend by Format, We expect each of those formats to grow in the coming years, especially video, display, and search. Display Search Banner, Rich Media, Sponsorship Video Other (Classifieds, , Lead Gen) $30.25 $25.69 $24.28 $5.96 $2.15 $36.30 $30.75 $29.07 $7.22 $2.71 $42.36 $36.05 $33.79 $8.57 $3.60 $47.85 $40.65 $38.13 $9.72 $4.21 $52.69 $44.81 $41.85 $10.84 $4.51 $50 $40 $30 $20 $ $0 Source: emarketer 32

33 U.S. Mobile Display Ad Viewability Rates 7.80% 14.70% 19.60% 28.20% 47.20% Performance benchmark: How long are mobile ads in view? 3.90% In-View Rate (60+ sec) In-View Rate (30+ sec) In-View Rate (15+ sec) In-View Rate (10+ sec) In-View Rate (5+ sec) In-View Rate Source: emarketer 33

34 Ad Fraud 34

35 Global Estimated Ad Revenue Lost to Fraud 2022 estimate $44.00 (billions)! 2017 $14.20 Ad fraud accounted for over $14 billion in lost revenue in By 2022, that total is expected to rise 214% to $44 billion unless we band together to stop it in its tracks. Source: Juniper Research 35

36 Estimated Global Ad Fraud Rates by Format and Transaction Type When it comes to programmatic, mobile display inventory presents the highest risk of fraud. Detected Rate of Ad Fraud Desktop Dislay Mobile Display Desktop Video Mobile Video Programmatic Buys 12% 15% 13% 2% Direct Buys 10% 6% 16% 4% Source: Integral Ad Science (Please note: This chart s data reflects fraud rates for buyers not using ad fraud prevention technology) 36

37 Reasons Senior Marketers Give for Not Buying Programmatic Fraud is the second-leading reason marketers provide for not buying ads programmatically. 7% Ad misplacement in problem searches/content channels 18% Media buying transparency and accountability 5% Fake news and digital media mistrust 7% Social media risks and reputation management 5% Viewability of digital advertising 7% Incompatible site content 7% Budget limitations 7% Phishing, scams and/or brand hijacking 9% Other 13% Ad fraud and website traffic verification Source: CMO Council and Dow Jones 37

38 How Mobile Ad Executives Say They re Responding to Ad Fraud Given the heightened fraud risk in mobile programmatic, Forrester asked 250 marketing leaders how they re fighting back. Many of their responses are applicable across all formats and channels. 6% Have not responded yet but plan to 19% We aggressively update blacklists 25% We reduced the media budget assigned to inapp advertising 25% 28% We subscribe to a blacklist service We implement target white lists 48% We use data and analytics tools to understand and measure suspicious patterns for mobile ad fraud 32% Require clarity from vendors on how they combat fraud 31% We reduced the media budget assigned to mobile web advertising 53% We have assigned fraud-related KPIs to our media buying agency and ad networks 43% Third-party traffic validation technology 32% Require clarity from vendors on how they combat fraud Source: Forrester and AppsFlyer 38

39 Machine Learning and AI 39

40 Projected Worldwide AI Technology Investment Companies across nearly all industries are expected to rapidly embrace artificial intelligence in 2018 and beyond. $ $ $ $ $ Source: emarketer 40

41 Retail Marketers Attitudes Toward AI in Marketing 80% AI marketing will revolutionize the marketer s role 86% Makes marketing teams more efficient 86% Makes marketing teams more effective 79% Changes the role of marketing toward more strategic work 82% Allows marketing staff to focus on valuegenerating tasks as AI automates workflows Marketers are especially excited about what AI can do for them. 80% of surveyed marketers say AI will revolutionize their role. Source: Emarsys 41

42 Areas Marketing Leaders Believe AI Can Help Them Sentiment analysis Lead scoring Customer segmentation/lookalike audience modeling Productivity of marketers Hyperpersonalization at scale Digital asset management Campaign analytics Business insights across data and systems 56% 57% 58% 59% 59% 59% 59% 59% Predictive journeys 60% 60% marketing leaders already believe AI can help them run more effective programmatic campaigns. We agree, which is why we put machine learning at the center of our new DSP: the AppNexus Programmable Platform (APP). Hyperpersonalized product recommendations 60% Programmatic advertising and media buying 60% Hyperpersonalization of content 61% Dynamic landing pages and websites 61% Delivering the right message, on the right channel, at the right time 61% Source: Salesforce 42

43 Header Bidding 43

44 Percent of Top 1,000 U.S. Web Sites Using Header Bidding, January 2018 The vast majority of the most popular, programmatic adsupported sites on the internet have adopted header bidding. 27% Do not use header bidding 73% Use header bidding Source: ServerBid Header Bidding Industry Index. Note on methodology: ServerBid tracks header bidding usage among the top 1,000 sites using programmatic advertising, as ranked by Alexa.com. 44

45 Header Bidding Sites in Top 1,000 by Type of Wrapper, January 2018 No wrapper Server-side wrapper Right now, more than half of header bidding adopters are only using a client-side wrapper. But server-side header bidding can help publishers add more demand partners without increasing latency. 7.91% of header bidding adopters are using a server-side wrapper, while 28.24% are deploying % Client-side wrapper only What kind of wrapper do the top 1,000 header bidding sites use? 28.24% Hybrid wrapper Source: ServerBid Header Bidding Industry Index 45

46 Header Bidding Sites in Top 1,000 by Type of Wrapper, January 2018 What wrappers are publishers using? 19.70% 19.60% 16.20% 6.80% 3.40% Index Exchange In-House Wrapper Built on Prebid Vendor Wrapper Built on Prebid Vendor Wrapper (Non-Prebid) In-House Wrapper (Non-Prebid) Source: ServerBid Header Bidding Industry Index 46

47 Top 20 Header Bidding Demand Partners AppNexus is the most widely-adopted demand partner for header bidding sites, appearing in 48.6% of header bidding setups for the top 1,000 sites. 47.6% 48.6% We ve seen firsthand how machine learning can optimize programmatic campaigns. When Greenhouse Group tested APP s augmented line item feature which uses machine learning to constantly optimize inventory selection and bid strategy against a manual campaign managed by one of their best traders, they found that APP achieved 13% lower CPCs while decreasing manual operation time by 73%. Kargo TrustX brealtime 32.9% 33.4% TripleLift RhythmOne YieldBot Conversant Facebook Pubmatic DistrictM PulsePoint Sonobi Sovrn AOL Criteo Rubicon Open X Amazon Index AppNexus 3.3% 4.2% 4.5% 6.6% 7.1% 7.1% 7.8% 34.4% 39.1% 40.6% 8.2% 10.1% 12% 13.1% 14.4% 23.9% Source: ServerBid Header Bidding Industry Index 47

48 Duopoly 48

49 Duopoly vs. All Publishers: Estimated Share of Total U.S. Digital Ad Revenue Duopoly (Facebook and Google) Other 45.30% 41.60% 36.90% 34.20% 32.40% Facebook and Google took up a whopping 63.1% of U.S. digital ad revenue in 2017, and their share is projected to grow further in the next two years. Source: emarketer 54.70% 58.40% 63.10% 65.80% 67.60%

50 Duopoly vs. All Publishers: Yearly Estimated Digital Ad Revenue Growth The concentration has gotten worse since 2015, when Google and Facebook began capturing new digital ad revenue at a much higher rate compared to publishers and other platforms. Duopoly (Facebook and Google) Other 31.80% 27.80% 20.80% 25.30% 18.20% 19.20% 17.70% 15.60% 12.40% 14.70% 10.60% 9.00% 9.90% 2.80% 4.80% 6.50% Source: emarketer 50

51 Duopoly vs. All Other Publishers: Estimated Share of U.S. Mobile Ad Revenue Other 41.50% Duopoly (Facebook & Google) 58.50% The duopoly captures a lower but still a clear majority share of mobile ad revenue as well. In 2018, that share is expected to jump from 58.5% to 60.9%. Source: emarketer 51

52 Where Digital Video Ad Revenue is Going, According to Senior U.S. Marketers 9.1% OTT 24.7% Mobile 39% Facebook The issue persists in video as well. Between Facebook and YouTube, marketers estimate the duopoly takes in 66.1% of all digital video ad revenue % YouTube Source: emarketer 52

53 Disclaimer All rights reserved. The information contained in this white paperis believed to be reliable and current as of the date of publication, but accuracy cannot be guaranteed. Recommendations or forward-looking statements contained in this white paper are based on estimates of future results at the time of publication and are inherently uncertain. Actual results may vary materially from those expressed or implied in any such recommendations and forward-looking statements. AppNexus is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise. 53

54 U.S. Display Ad Click-Through Rates by Format 0.08% Custom In-Page 0.08% Enhanced Banner 0.07% Image 0.06% Rich Media 0.03% HTML Banner 0.05% Flash In-Page Enhanced banner and custom in-page ads attract the most clicks in the display category. Source: emarketer 54

GLOBAL VIDEO-ON- DEMAND (VOD)

GLOBAL VIDEO-ON- DEMAND (VOD) HOW WORLDWIDE VIEWING HABITS ARE CHANGING IN THE EVOLVING MEDIA LANDSCAPE MARCH 2016 A CHANGING VIDEO-VIEWING LANDSCAPE Nearly two-thirds of global respondents say they watch