Complex Made Simple

Global online ad spend set for nearly double digit growth until 2021

The global Internet ad spending market is expected to grow at a CAGR of 9.44 per cent during the period 2017-2021, says a report by Research and Markets.

To calculate the market size, the report considers the revenue generated from different types of Internet ads and by different regions in the global Internet ad spending market. The report also includes a discussion of the key vendors operating in this market.

Growing M&A in online advertising

The Global Internet Ad Spending Market 2017-2021 report has found that the latest trend gaining momentum in the market is growing M&A (mergers and acquisitions) in online advertising.

The number of M&A in the global Internet ad spending market, particularly in the online advertising technology or AdTech sector, has been increasing since 2015.

The publisher forecasts that this trend will be prevalent in the market during the forecast period as well. With the expansion of the global Internet ad spending market, small and medium-scale vendors are finding it difficult to maintain their position in the intensely competitive market and are getting acquired by larger vendors.

During 2005-2015, more than 375 companies in the AdTech sector underwent M&A. The trend has continued in 2016, with the recent acquisition of AdTech firm Appscotch by a US-based business intelligence company App Annie in March 2016.

Increasing customer base

According to the report, one of the major drivers for this market is increasing customer base. Digital marketing campaigns on social media platforms help attract more clients.

These platforms are rapidly becoming most conducive to engage the target audience. Posts and updates from companies on social media provide insights and latest news regarding their business and products.

These posts on social media platforms, such as Facebook and Twitter, are most likely to be viewed and shared. These shares generate traffic to the company’s website and increase familiarity with its services and products offered to a large customer base.

Furthermore, sharing on social network platforms increases credibility, as recommendations from friends and acquaintances are regarded as trustworthy.

Rising complexity

Further, the report states that one of the major factors hindering the growth of this market is the rising complexity in integration. Online advertising involves the integration of ad exchanges, networks, servers, data suppliers and retargeting companies on an online platform.

In addition, optimised online advertising requires the integration of stakeholders on the platform, which is a complex process. The attribution and tracking of the online ads are difficult as heavy investments, in terms of technology and money, are required for the transition from one platform to the other.

The report notes that there is also a requirement of a highly skilled workforce for the development of the software that enables the complex integration process, which adds an additional cost. The need for heavy investments leads to either firms becoming defunct or acquisition of the smaller vendors.

Key vendors over the next five years, according to the report, will be Facebook, Google, LinkedIn and Twitter.

(This story first appeared on AMEinfo’s sister publication Gulf Marketing Review’s website)