The digital advertising market consists of the sales of advertising services by entities (organizations, sole traders, and partnerships) that plan, develop, create and manage advertisement and promotional activities in digital media. Only goods and services traded between entities or sold to end consumers are included. Digital advertising delivers promotional content to users through various online and digital channels such as; social media, email, search engines, mobile apps, affiliate programs, and websites to show advertisements and messages to audiences. Digital advertising allows companies to reach the right people with the right message at the right time, thus generating a better return on investment.
The global digital advertising market reached a value of nearly $374.2 billion in 2020, having increased at a compound annual growth rate (CAGR) of 15.7% since 2015. The market is expected to grow from $374.2 billion in 2020 to $763.6 billion in 2025 at a rate of 15.3%. The growth is mainly due to the increasing internet penetration and growing demand for digital advertising. The market is expected to grow from $ 763.6 billion in 2025 to $1,449.0 billion in 2030 at a CAGR of 13.7%.
Growth in the historic period resulted from strong economic growth in emerging markets, increased internet penetration, government initiatives in developing economies, rising penetration of e-commerce, increased availability of mobile devices, rapid development in technology, and an increase in social media usage. Factors that negatively affected growth in the historic period were increased use of ad-blockers, skilled workforce shortages, government regulations, and data privacy issues.
Going forward, Increasing expenditure by end-use industries, rising urbanization, and increasing adoption of 5G networks and the internet of things (IoT) will drive the growth. Factors that could hinder the growth of the digital advertising market in the future include stringent regulations, intense competition, security challenges, and data collation.
The digital advertising market is segmented by the platform into mobile ads, desktop ads, digital TV, and others. The desktop ads market was the largest segment of the digital advertising market segmented by platform, accounting for 43.4% of the total in 2020. Going forward, the digital TV segment is expected to be the fastest-growing segment in the digital advertising market, at a CAGR of 15.6% during 2020-2025.
The digital advertising market is segmented by ad format into digital display ads, internet paid search, social media, online video, and others. The internet paid search market was the largest segment of the digital advertising market segmented by ad format, accounting for 30.7% of the total in 2020. Going forward, the online video segment is expected to be the fastest-growing segment in the digital advertising market, at a CAGR of 20.6% during 2020-2025.
The digital advertising market is segmented by industrial vertical into media and entertainment, consumer goods & retail industry, banking, financial service & insurance, telecommunication IT sector, travel industry, healthcare sector, manufacturing & supply chain, transportation and logistics, energy, power, and utilities, and others. The other market was the largest segment of the digital advertising market segmented by industrial vertical, accounting for 24.3% of the total in 2020. Going forward, the travel industry segment is also expected to be the fastest-growing segment in the digital advertising market, at a CAGR of 17.2% during 2020-2025.
North America was the largest region in the global digital advertising market, accounting for 32.0% of the total in 2020.
The COVID-19 (coronavirus) outbreak, combined with the price collapse of crude oil in Q1, wreaked havoc on the economic landscape. In response, the Federal Reserve cut its interest rate target to near-zero in the middle of March. Considering that much of the economy was purposely put on ice to slow the spread of the coronavirus, the longest economic expansion on record ended. Since then, regional reopening’s have occurred at differing levels throughout the country. States have followed different reopening plans, with certain states opening up much more rapidly than others. This has all occurred against the backdrop of significant fiscal support, enabling consumers to weather the most rapid contraction in recorded economic history.
Overall, consumer spending declined by 3.8% in 2020, the first decline since 2009 and the worst decline in many decades. With the deployment of vaccines produced by Pfizer, Moderna, and Johnson & Johnson well underway, two-thirds of adults have received at least one dose with more receiving booster shots beginning November 2021. However, vaccine hesitancy has slowed the pace of vaccinations significantly, posing a risk to the country’s goal of reaching herd immunity. Just as well, Congress passed further fiscal support measures totaling $1.9 trillion in March to help bridge the gap between then and when the economy is fully reopened. The overwhelming nature of the stimulus plan has elevated growth prospects for the United States in 2021, as it buffers the already surging release of pent-up demand. Though variants of the virus pose a potential threat to this forecast, this forecast assumes a likely full reopening of the economy in the fourth quarter.