Advertising Global Spending: Digital Passes TV for First Time - and Mobile Alone will pass TV in just Two Years

Magna Research (part of IPG Media) has released their latest count of this year's ad spend. They have been reporting 'digital' spend for many years and finally now, 2017 becomes the first year when TV is dethroned as the largest ad spending platform. Yes this is the year when 'digital' passes TV in global ad spend. Big news. In fact, earth-shattering news considering how much TV has been the gorilla in advertising industry for half a century. Bye bye TV. Digital now rules.

But digital used to be the PC based internet. Even a few years ago, the majority of digital spend went to the legacy '6th mass media' internet on PCs, laptops and tablets. Mobile was there, yes, in the mix of digital but for most of the time that Digital has been calculated, 'mobile' was the afterthought. The weird thing they did in Japan and mostly was ignored. But as mobile grew to catch up with the PC, the digital world finally noticed and of course today mobile is the larger slice of digital. We on this blog have always known this, and have strongly highlighted the distinctions between the 7th mass media mobile as distinct (and better and larger than) the sixth mass media PC-based legacy internet (TV is the 5th mass media, Print was the First Mass Media). So lets break down the Magna numbers and show the relevance of MOBILE as the dominant slice of digital. How is 'mobile alone' vs TV. When will mobile pass TV (that is happening sooner than you think.). Read on. This is the numbers blog on the global ad industry and its near future.

MAGNA NUMBERS ON TV AND DIGITAL

Lets first start with the Magna numbers. This is the graphic as per the Recode website, using the latest December 4, 2017 Magna numbers for TV and Digital advertising expenditures globally, since year 2000:



Source: Magna IPG Mediabrands December 4, 2017
Recreated via graphic at Recode website


Note that year 2017 numbers are still only an estimate, and of course years 2018 and 2019 are forecasted by Magna.

We knew this moment in time was coming. The 'digital' industry had forecasted this moment for a long while. They started to predict the demise of TV back when the internet was a young thing. But it was not the PC based internet that did it. Did you know that the PC based internet (ie 6th mass media internet) had STOPPED GROWING its revenues many years ago. It has been flat (while 'digital' kept growing). So what was powering digital then? Obviously it was mobile for the past few years. Only mobile. When tablets are counted as part of PC internet. Only mobile (dumbphones and smartphones) had powered the growth of digital now past TV. Who told you THAT? That was first said in my book literally 15 years ago in 2002. So yeah. This IS a big moment but it didn't go the way most 'digital experts' predicted still five years ago. It went as THIS BLOG and our readers have known. It went the way of mobile.

SPLITTING MOBILE OUT OF DIGITAL VS TV

So lets split out mobile from digital to see their proportions. I am using the Magna numbers for total, and separating out the 'mobile ad' spend as per the TomiAhonen Almanac for the mobile proportion because it is the only source that gives a consistent view back to the start of mobile advertising. This is that same picture above, when digital spend is split into the PC internet spend (including desktop PCs, laptop PCs and tablets) vs mobile spend (only smartphones and dumbphones, but including of course the mobile internet including WAP, including ads on apps across all app platforms, and including of course mobile messaging from SMS and MMS to Whatsapp etc). This is the 'real picture' of TV vs PC vs Mobile:

 

Source: TomiAhonen Consulting Dec 15, 2017
Based on Magna IPG Mediabrands Dec 4, 2017 data and TomiAhonen Almanac 2017 data
This graphic  may be freely shared


This is the reality. Who cares about the 'PC digital' spend that ended up stalling at half the size of TV? The only real valid important digital spend is MOBILE which is already larger than 'PC digital' and in two years will be twice the size of PC digital spend (which includes tablets). 

Obviously the HUGE news from that graphic is year 2019 and that yes, in just two years, mobile ad spend alone (apart from PC spend including tablets) will grow to be bigger than TV spend. Yes, THAT moment is now only 2 years away. Year 2019 will be the first year that mobile ad spend will be bigger than TV and obviously mobile ad spend will be the largest slice of ad spending globally.

But understand this graphic and how sudden and dramatic the change has been to the ad industry. They are still struggling to get to grips about the 'rapid' rise of digital. See how it went from being just 1/10th the size of TV only a dozen years ago, to now being the same size as TV. So the ad industry was looking at the growth of digital and wondered 'should we' and 'how much' to spend on digital, while TV was still the gorilla in the room. All the big awards were based on TV ad campaigns of course, that was where the massive money (and influence) used to be. That is now going to change. TV is being relegated to second seat. It will be incredibly painful for many older TV ad execs who have spent decades perfecting the TV advertising spot (that issue - of how the old TV ad executive will suffer a pain of transition, was first explained in the signature book of this blog - Communities Dominate Brands - exactly twelve YEARS ago. Those in advertising who read that book are not struggling today because they had seen the future. For others who were not warned of how mobile will totally shatter their safe TV-focused ad world, for them it is huge pain now). They have to learn about digital, social and .. mobile. Isn't a smartphone screen just a tiny PC screen (haha, 6th mass media thinking, OF COURSE NOT - as Google started to preach a decade ago - mobile is a DIFFERENT mass media - ie 7th mass media - and hence you have to understand why and how mobile is DIFFERENT - indeed, BETTER than a PC screen based internet digital ad medium).

We knew. On this blog we have from the start of this blog a dozen years ago, always made the distinction that mobile is different. The very first example of WHY mobile is different and can do things a PC cannot do, was Shazam, which just this past week got sold to Apple for 400 million dollars (congrats to all of our friends at Shazam). It was 'mobile magic' back in 2003 when Shazam launched - and we, readers of this blog have literally known that mobile is a distinct media from the PC internet legacy (6th mass media) 'obsolete' internet - we have known that from the first blog postings on this blog from year 2005. We have consistently remarked on where the differences were, and reported on not only overall digital stats, but frequently provided the ONLY mobile relevant stats to whatever digital stuff was being peddled in the news. Now we know and now we have those facts too. So let me show the above graphic in two more pictures, so you can undersand WHY the digital industry didn't 'see' the revolution, and why it is so VITAL to understand mobile today. Lets start with the additive model. Over the past 5 years TV and PC ad spend has been about flat (TV growing at 0.4% ie less than half of one percent per year, on average; while PC internet ad spend has grown by only 0.5% per year ie exactly one half of one percent per year, on average). The previous ten years the TV industry grew at annual growth rates of 4% and the PC digital spend grew at 22% per year. So after a decade of growth, the ad execs were seeing flat years in TV and PC - and they thought everything was fine, because there was not a CONTRACTION. The numbers were NOT GOING DOWN. They were now essentially flat. See how mobile was purely an ADDITIONAL ad spending part, it did not 'eat into' the TV or PC spend.




Source: TomiAhonen Consulting Dec 15, 2017
Based on Magna IPG Mediabrands Dec 4, 2017 data and TomiAhonen Almanac 2017 data
This graphic may be freely shared

Contrast the flat growth rates of TV and PC advertising revenues to mobile. Mobile went through many years of DOUBLING IN SIZE per year, globally. In the past 5 years, mobile is still sustaining growth rates of - get this - 34% PER YEAR. the CURRENT (slowing down) growth rate of mobile ads, is greater than PC internet at its HIGHEST growth rates! And mobile is far bigger now growing at 34% per year, when TV and PC are flat. Hello? Yes, we knew. Yes on this blog we have always known. Why? Because 'numbers are my buddies' - we went by the numbers. The cold numbers. Which tell us one story: Mobile. Always. Wins. Mobile always wins. Mobile ALWAYS wins. (And a tablet is not part of mobile, tablets are part of the losers in the PC column with desktop and laptop PCs.)

We know of course that this means, that the execs in the TV and PC worlds would be lulled into a false sense of security because they did not see the big picture shifting TOTALLY and their roles becoming increasingly irrelevant. This is the same way train operators died to airline operators (in long distance train travel that used to be very profitable) or how fixed telecoms carriers/operators lost out to mobile. We have seen this picture coming and we warned of it on this blog and in my books. But now consider the 'alarm diagram'. Lets put the SAME data into the proportional share.

THE ALARM DIAGRAM

When any Chief Marketing Officer sees the Alarm Diagram, they will ask: "Why is most of my ad team working on TV ads, and a small part on digital - and MOST of my digital working on PC not on mobile? Gosh, the MAJORITY of my work, staff and effort HAS to be on mobile!!!" This is the ALARM graph. This is what is needed:



Source: TomiAhonen Consulting Dec 15, 2017
Based on Magna IPG Mediabrands Dec 4, 2017 data and TomiAhonen Almanac 2017 data
This graphic  may be freely shared

That is the reality. Almost all execs in advertising will have a reasonably recent view of their industry, where TV was half, and digital was mostly PC, with a small slice in mobile. They thought in rough terms of 3:2:1 of TV:PC:Mobile. You 'of course' did TV, and usually added digital, and perhaps added some mobile if you had extra funds. That was a realistic view only a few years ago. Today, TV is half, mobile is the large part of digital and PC is the little brother. But in just two years mobile will be the same size as TV. And in about 5 years, the picture is totally reversed - mobile alone will be HALF, and in the other half, TV will be twice the size of PC. Yes. Soon global ad spend will be at a ratio of 3:2:1: Mobile:TV:PC. In that world where mobile leads, you ALWAYS do mobile, you usually add TV and you MIGHT do the legacy PC if you have the extra funds.

HOW ABOUT REACH?

While I have you, let me also share a statistic from the TomiAhonen Almanac 2017 edition related to this revenue spending. What is the REACH of the three big media platforms? How many UNIQUE audience members do they reach? A TV in Africa is shared by the whole family. Meanwhile in mobile stats, many of us have two accounts or even two active phones. The only source on the planet to give the reach of all the major platforms that reach 1 Billion humans, ranging from Facebook to old landline telephones, is the TomiAhonen Almanac. From the Almanc, the reach (end of year 2016) of TV vs PC vs Mobile:

REACH OF TV, PC AND MOBILE, BY UNIQUE HUMAN AUDIENCE
Mobile unique audience globally . . . 5.8 Billion Humans (78% of humans alive)
TV unique audience globally . . . . . . 5.3 Billion Humans (72% of humans alive)
PC unique audience globally . . . . . . 1.5 Billion Humans (20% of humans alive)
Source: TomiAhonen Almanac 2017
Note: PC includes desktop PC, laptops and tablet PCs. Mobile excludes tablets and only includes smartphones and 'dumbphones'
This data may be freely shared

So yeah. Mobile reaches a larger audience of unique human beings already today than TV and is FAR FAR larger by reach than PCs even as tablets are included in the count of reach of PCs. Note that many who own a PC may have one at work, another at home, and a tablet (in addition to one or two smartphones). So the total count of the reach of unique users of PCs is less than total PCs in use, obviously, just like with mobile phone reach (total mobile subscribers is already 7.8 Billion globally (105% penetration rate per capita), if all active mobile accounts are counted including those of us who have two phones). How might you capitalize on this type of information? Go to leading countries to see. Did you know one of Europe's leading mobile ad markets is.. Turkey? Yes, VERY exciting vibrant mobile ad market (also quite rarely Turkey also is a leading European country in another vital area - mobile MONEY market, but that needs to be another blog article, we also have cool news about mobile money stats). I've had the pleasure of visiting Turkey many times including doing a keynote to the MMA Mobile Marketing Association event in Istanbul and visited with many Turkish companies over the years. So what is happening in Turkey they? One of their largest ad agencies just rebranded. But how? That is the interesting angle that might make you think... 

We have lots of 'pure mobile' ad agencies around the world. There are tons of 'digital agencies' in the world. And there are lots of 'full portfolio' ad agencies. So one of the most successful full service ad agencies of Turkey, including a frequent winner of various awards including mobile, is Alametifarika. They just last month rebranded to 'Alamet Holistic' and get this. They now say the current ad market in Turkey looks like this "Yesterday it was the TV screen. Today it is the TV and Mobile screen." In rebranding Alamet Holistic will be the master of these two areas. How's that for a twist. Its kind of a digital agency but not. It is kind of an all services agency but not. It is in fact - the prototype of the future ad agency. In the (very near) future all agencies HAVE to be 'dual focus' agencies that are masters of TV AND MOBILE (while not worrying too much about Print or radio or PC etc). And to really highlight that shift, Alametifarika rebranded to Alamet Holistic. They now focus on TV and Mobile. Wow, cool. And congrats and good luck to all my friends there at Alamet Holistic.

There. Now you have all the media numbers on one blog - and only one source. Nobody else has yet counted the unique reach of all major media modes (you need to go to different sources, who often use differing definitions, ie tablets may be counted both into PC count AND into mobile count, etc).Bookmark this blog page and send your friends to read it, as this is literally the only source on the planet that gives both the breakdown of global media spend across TV, PC and mobile; and it gives the unique audience reach of TV, PC and Mobile. Yeah may I add: Mobile Always Wins.

Correction: Early version of blog had typo on 3 of the graphics, listing scale as 'millions' when it was supposed to be 'billions'. It is now corrected. Thanks to Twitter follower @Thomasbcn for noticing the typo.

FOR THE RANDOM VISITOR

For any media exec reading this who is not one of our regular readers on this blog - please trust me, I've written 12 books on mobile and Forbes calls me the most influential expert in the mobile industry. I do know this stuff. Understand this point. A Tablet Is Not 'Mobile'. The tablet is only an ULTRA-PORTABLE device. That is not what makes your ADVERTISING mobile. Only mobile is mobile. A mobile phone or smartphone is mobile, a tablet is only 'ultra-portable'. Do not waste your effort and money on tablets pretending to be mobile. STUDY MOBILE. Why is mobile different. What are the unique abilities of mobile. If you do tablet ads, take that money FROM THE PC ONLINE BUDGET. Your mobile budget needs to be bigger than all PC, laptop, tablet, online budget combined. Mobile is a DIFFERENT mass media, the 7th mass media. PC including tablets is the obsolete old legacy mass media, soon as irrelevant as doing ads on FAXES (those once were a thing...) or newspapers! (reading yesterday's news today). Don't make this mistake today in 2017 to think that ooh, it is a smartphone with a large screen? No. A tablet is an ultra-portable PC, not a mobile device. A tablet is INFERIOR to a smartphone. A tablet is ONLY ultraportable. All mobile phones, smart and dumb - are DIFFERENT.

Incidentally, that is the REALITY of advertising in the world's largest economy already today, in China, as WPP's China Boss told us already. China is in this reality where Mobile rules, TV comes second and PC is the distant third. Prepare for THAT future, because that IS the global future of advertising. And remember where you heard it first? We will give you all the mobile numbers first. If you need more, get the TomiAhonen Almanac. As always at this time at the end of the year, you get the 2-for-1 offer, buy the current Almanac now, you get next year's edition for the same price, when it comes out early in the new year. Nobody else has all the mobile ad, mobile media, mobile messaging, smartphones, tablets, apps etc numbers in one place, like we have in the TomiAhonen Almanac.

Comments

[Winter]

Tomi, I am curious how these digital ad dollars are spend? TV ads are well known, plain ads, sponsoring, and product placement. But digital ads are more than ad banners and search words, or not?

[Jim Glue]

How much of that is text? How much of that goes through apps? How much of that are web ads on mobile? What is the platform breakdown on mobile? Feature phone/Google Android/AOSP/IOS? What are the trends within each?

Who are the big mobile ad winners besides Facebook and Google?

Inquiring minds want to know

[Tomi T Ahonen]

Hi Winter & Jim

I've occasionally written of those divisions on this blog. I have the data in the Almanac every year. I'm not going to publish ALL the data from the Almanac for free haha. I'll do some tidbits for free as I do every year, when the next Almanac comes out early in the new year. (you did notice I again gave more freebie stats in the above article, excerpted from the current Almanac that NO other source has made public)

Tomi Ahonen :-)

[Jim Glue]

Only fair. Keep up the good work

[Winter]

Tomi, I understand. I was just curious, as you have derided banner ads for year.

[Admybrand]

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[Best ISP]

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