Global internet advertising spend is expected to overtake that for television in 2017, as the total number of internet users approaches 3.5 billion, with almost 3 billion smartphones worldwide. Digital leaders are meanwhile transforming media with better user experiences, which is putting pressure on traditional television companies to respond.
The prediction that spending on internet advertising will exceed that for television advertising is one of the trends highlighted in the annual Kleiner Perkins report presented by Mary Meeker.
The extensive report provides a comprehensive compendium of internet trends and at 355 pages is 40% longer than the same report the previous year.
The advertising statistic is based on Zenith Advertising Expenditure Forecasts, published in March.
Zenith forecast that the internet will attract nearly 37% of all advertising spend in 2017, up from 34% in 2016. With internet advertising expenditure expected to surpass $200 million, it will be the first year in which more money will be spent on internet advertising than advertising on traditional television, which is forecast to total $192 billion.
The sheer scale of internet advertising means its growth rate is slowing. Internet advertising spend grew 17% in 2016, down from 20% in 2015, and is expected to slow to 13% in 2017, 12% in 2018 and 10% by 2019, although it will continue to add around $23 billion a year.
Google and Facebook alone accounted for a fifth of all global advertising expenditure in 2016, according to the Top Thirty Global Media Owners report from Zenith.
Google, under its holding company Alphabet, is the largest media owner in the world, attracting $79.4 billion in advertising revenue in 2016, three times more than Facebook, the second largest, which attracted $26.9 billion. The largest traditional media owner is Comcast, which was ranked third, with $12.9 billion in advertising revenue. The Walt Disney Company, 21st Century Fox, and CBS ranked fifth, sixth and seventh respectively, after Chinese web company Baidu.
One of the standout statistics was for Netflix, an online company that relies upon subscription revenue, rather than advertising.
In the United States in 2015-2016, Netflix delivered 175 million minutes of video a month, which was more than CBS, or Time Warner, or Viacom, and approaching that of 21st Century Fox and Disney, although NBC Universal led with 264 million minutes.
Netflix accounted for 35% of downstream video traffic in North America in the second half of 2016, as reported by Sandvine.
The Kleiner Perkins report suggests that media is feeling the effects of digital disruption at a torrid pace, being transform with better user experiences, as shifts to internet-enabled media continue.
As evidence for this, the report observes that the number pay television households in the United States is falling at an average of 1.3% a year, although that still represents just under 100 million households, compared to a peak of 105 million at the end of 2010.
That may represent a trend, but the disruption of television is perhaps slower than some in Silicon Valley might hope. One of the biggest trends of the last year has been the launches of online television services by major media companies to recapture lost subscribers.
The rise of Netflix has been remarkable, but the likes of Comcast and AT&T are equally determined to maintain their market share.
The Internet Trends 2017 report is available to download from the KPCB web site.