- Amazon's position as a major digital advertising player will rise considerably over the next five years, with Forrester Research predicting the company's ad business will surpass $2.5 billion in revenue by 2021, according to an updated report shared with Marketing Dive.
- Spending on display and social media advertising in the U.S. overall is estimated to grow by nearly 70% by 2021, Forrester said. The research firm sees in-app video ads driving mobile ad growth, which will double over the next five years and command the majority of marketer's online display investments. Excluding search, digital channels will make up one-third of total ad spending in 2021 compared to one-fourth in 2017. Social media ad spending is expected to reach $40 billion by 2021, much of it benefiting tech giants like Facebook.
- Despite signs of growth, 43% of online U.S.adults now use an ad-blocking software on at least one device and 16% do so on a smartphone. Additionally, one-third of display ad spending will be wiped out annually over the next five years due to factors like ad fraud, ad blocking and unviewable inventory. Forrester foresees a shift away from open-exchange programmatic practices in favor of fewer but more transparent private and direct-trading platforms. Concerns about ROI for display ads will keep traditional channels like TV and out-of-home (OOH) in the mix with single-digit growth through the next few years.
Amazon's ability to break the digital duopoly comprised of Google and Facebook is looking more and more like a reality that will arrive in the near future as the Seattle-based company continues to synchronize various aspects of its business such as search, e-commerce and even brick-and-mortar retail with advertising. Forrester's updated predictions fit in with other recent industry analyses, including one from eMarketer released last month that expects Amazon's digital ad revenue will grow 48.2% to hit $1.65 billion this year, making it the fifth-largest generator of digital ad revenue in the U.S. — ahead of social media platforms like Twitter and Snapchat.
Some marketers might welcome a more direct challenger to the duopoly, but Amazon poses its own threats to traditional CPGs and retailers, and has frequently been cited this year as a reason for their cutting of advertising budgets. These shifts have impacted the bottom lines of almost all the traditional agency holding groups.
On top of the Amazon developments, Forrester's updated report backs several emerging trends in 2017 and underscores where many in the industry believe the digital space is heading: namely, toward more private and carefully-controlled direct trading marketplaces as current platforms have proven riddled with non-transparency and other issues.
The firm specifically called out an instance earlier this year where JPMorgan Chase cut back the number of websites serving its ads programmatically from 400,000 to 5,000 with little discernable impact on business performance. Couple that with ongoing pain points like ad fraud and generally poor-quality ads, which Forrester estimated marketers wasted as much as $7.4 billion on last year alone, and the space clearly appears primed for a serious shakeup.
Some in the ad tech category are attempting to rise and address these challenges to create a more premium experience for digital advertisers. Last month, Rubicon Project partnered with Google's DoubleClick to integrate its Private Marketplace deals directly into the Bid Manager interface, which might clean up some of digital's murk by enabling brands to buy known audiences at scale with efficiency.