Digital to account for half of U.S. ad sales this year for first time

U.S. ad revenue has also hit an all-time high, according to Magna's new forecast.

Digital advertising will hit some watershed moments this year, including accounting for slightly more than half (51.1 percent) of total U.S. ad sales for the first time, according to Magna’s Fall 2018 U.S. Advertising Forecast.

IPG Mediabrands’ Magna says in the report that full-year ad revenue is expected to hit an all-time high in 2018, reaching $207 billion. Magna expects advertising growth to continue in 2019 at 4 percent, and it increased its growth forecast for this year from 4.7 percent in June to 5.2 percent.

Recurrent events will generate $4.3 billion in incremental ad dollars this year, the report states, with political advertising predicted to drive $2.9  billion in television, up 19 percent compared to 2014. Additionally, the Winter Olympics and FIFA World Cup have already garnered $630 million and $200 million in incremental TV revenues, respectively.

The first half of 2018 saw ad revenue jump by 6 percent (excluding cyclical events), which Magna believes came mainly from spending across finance, pharma and technology. For the rest of this year, Magna forecasts that growth rates will slow, but still increase by 4.2 percent.

On the mobile side, digital ad sales from smartphone impressions and clicks are anticipated to increase by more than 30 percent to about $70 billion, which is more than TV and double desktop-based evenues. Desktop sales, perhaps unsurprisingly, will slump by 3.9 percent due to lower consumption and ad blocking.

Digital search revenues in the first half of the year grew by 18 percent, while social media ad sales jumped 38 percent and online video ad sales went up 27 percent. TV, on the other hand, saw flat ad sales when taking out cyclical effects, print was down 16 percent and linear radio sales declined more than 5 percent.

"The advertising economy showed robust growth in the first half, as the strong economic environment benefits key sectors like finance, technology and travel," said Vincent Létang, executive-VP of global market intelligence at Magna and author of the report in a statement.

"Digital media was the big winner again, but national TV revenues were also stronger, stabilizing after six quarters of erosion, helped by strong spending from pharma and food/drinks, and strong pricing. Meanwhile local TV, radio and print continue to struggle with weak local media spend (e.g. auto) and poor pricing," the statement added.

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