Social media revenue to overtake newspaper spending

(Getty)
(Getty)

The amount of money spent on social media advertising is forecast to overtake newspaper ad revenue by 2020.

A report by advertising agency Zenith says spending on social media sites will account for 20 percent of all internet advertising by 2019.

Ad spending on social media sites will grow by 72 percent between 2016 and 2019, rising from US$29 billion to US$50 billion (NZ$70.3 billion).

That would put spending on social media ads just one percent behind the US$50.7 billion (NZ$71.07 billion) Zenith predicts will be spent on newspaper ads.

But by the following year Zenith says social media ad revenue will be "comfortably ahead" of the money that will be spent on newspaper advertising in 2020.

Zenith's report says the rapid expansion of social media sites on mobile devices, and faster internet connectivity, has triggered a huge shift in the way people get their news.

Online video advertising is also rapidly growing, with Zenith predicting that it will total US$35.4 billion globally by 2019. That would put it fractionally ahead of the amount spent on radio advertising (US$35 billion). But it will still be less than a fifth (18 percent) of the amount generated by television.

To put the figures in perspective, Zenith said in September that total global advertising expenditure would grow by 4.4 percent this year to US$539 billion.

In its latest report it predicts that global advertising expenditure will grow by 4.4 percent next year as well.

After that it predicts 4.4 percent growth in 2018, and 4.1 percent in 2019.

Zenith says that since 2010 the global ad spend has been between 4 and 5 percent. That is "generally at or below the growth rate of global GDP."

"Before the financial crisis, advertising would typically exaggerate the wider economy, growing faster in times of expansion and shrinking faster during recessions, with frequent changes in year-on-year growth rates."

But Zenith says that since then the advertising industry appears to have entered a phase of more stable growth.

That has been helped by the continued rise of advertising spending in Asia and a recovery in Eastern Europe. This has helped to offset a slowdown for ad expenditure in the Middle East and North Africa.

Newshub.

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