Internet-based Companies Boost U.S. Ad Revenue
Aug. 15, 2017 11:55 a.m. ET
Domestic ad revenue in 2017 is on track to increase 4% to 5% in 2017, thanks to growth from internet-based companies, according to Brian Wieser, a senior research analyst for Pivotal Research Group.
A group of ten large web firms, including Google, Amazon and Expedia, increased their spending on sales and marketing by a median growth rate of 24% in the most recent quarter, he said in a note to investors.
“We think it’s safe to say that this implies web endemics increased spending on advertising at a significantly faster pace than did other types of advertisers,” he said.
Amazon spent $951.2 million on media in the U.S. in 2016, not including spending with some of the biggest social media platforms, according to data from Kantar Media. That’s up about 8% from $877.2 million in 2015.
Increased spending by web-based companies is likely fueling the 20% growth rates experienced by digitally-oriented media owners, said Mr. Wieser.
Many of these big ad spenders, such as Google and Amazon, are also the digital media platforms that are raking in ad revenue from advertisers.
“Industry growth is more notable considering the widely reported weaknesses at many of the world’s largest mass marketers, especially including fast moving consumer goods manufacturers,” he said.
Mr. Wieser is forecasting a 1% decline for national TV and similar rates for radio and outdoor due to more “tepid growth rates” by “traditional marketers.” Most print-based media will experience double digit declines, he predicts.
While digital media platforms like Facebook and Google are currently benefiting from increases in digital ad spending, Mr. Wieser predicts that digital media owners will experience a deceleration of growth of domestic ad revenue into the “low teens and then high single digits within several years’ time.”
Write to Alexandra Bruell at alexandra.bruell@wsj.com
