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Trouble in Paradise? Digital ad spending growth rates plummet

Standard Media Index (SMI) unveiled its review of online digital ad spend in 2016 and the numbers show some warning signs for publishers.

After years of high double-digit growth in online ad sales, the market slipped into mid-single digits in 2016. By 4Q 2016, the number slipped into the low single digits, and in December, the YOY growth rate slipped to less than 1 percent.

“Brands today are marketing in a digital world and we have seen the rapid growth in the sector in the past several years. With that being said, the trajectory of digital spend has recently hit a major speed bump as brands question the efficacy of the medium,” — James Fennessy, CEO of SMI

As Bob Hoffman points out in his blog, The Ad Contrarian, when you take the two major players (Google and Facebook) out of the equation, the numbers look even worse. Overall, it shows a net growth rate of… minus 2.

By comparison, spending on TV ads grew 4.4% in 2016 and 5.5% in December YOY.

The Big Story is… TV

“The big story we saw in Q4 was a recommitment to television for a number of big categories of advertisers. Retail, Telco’s and Consumer Electronics have not seen the outcomes they expected from digital and have moved back to the medium they have trusted for decades. Retailers, in particular flooded back to TV over the holiday period after moving way too much to digital in 2015.” — James Fennessy, CEO of SMI

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Paul Dughi

Paul Dughi

Huntsville, Alabama

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