U.S. advertisers' spending on digital advertising will overtake TV in 2016 and hit $103 billion in 2019 to represent 36% of all ad spending, according to Forrester's latest estimates based on its ForecastView model. U.S. advertisers will spend $85.8 billion on TV ads in 2019, which will equal 30% of overall ad spending that year, according to Forrester.
But digital won't usurp TV because of big brand advertisers taking their commercial money and redirecting it toward YouTube and Facebook. There will be some cannibalization of TV budgets, but the bigger contributing factor will be an influx of new money dedicated to digital because marketers are able to prove that digital works, said Forrester analyst Shar VanBoskirk.
Marketers aren't upping their digital budgets because of bright shiny objects like so-called native ads or computer-automated programmatic buying processes. They're doing so because the economy has recovered. Advertisers have more money to spend now than in recent years and the oversupply of ad inventory online gives them a lot of places to put that money. And they're comfortable spending their money online because years of testing and learning has shown those digital dollars are well spent.
"We've landed at a more mature state with digital than we were even in our last forecast where people were still wildly experimental. Now for the same reason [marketers] have proven data to grow their budgets, they also have proven data to not overspend," Ms. VanBoskirk said.
There will still be experimentation, but it will be more measured. For example, more experienced digital marketers will move around their online budgets. They are beginning to cap their proven search budgets and put any additional money to digital's emerging areas like mobile and inventory that can be bought programmatically, Ms. VanBoskirk said. And new-to-digital advertisers, like b-to-b brands, are limiting their money initially to more cost-efficient channels like search.
As a result of the care marketers will take with their digital budgets, Forrester expects the overall growth in digital ad spending will start to slow slightly.
$137.8B U.S. ad spend for top 200 advertisers
The ability to measure digital ads' effectiveness is why the hierarchy of digital ad channels won't change in the next five years, even with an increase in mobile ad spending. Forrester expects advertisers to spend $46 billion on mobile ads in 2019, but spread that amount among digital's umbrella channels so that a mobile banner buy counts as display, for example. Mobile will drive 66% of the growth in digital ad spending over the next five years, but those smaller-screen dollars will be largely going to the same digital channels as desktop dollars.
Search still king
Search advertising will remain the biggest benefactor because advertisers are able to measure its benefits most directly. Display advertising, which includes digital video ads, will follow close behind because it appeals to brand advertisers. Spending on social advertising, like Facebook's and Twitter's in-stream ads, will grow more than any other digital channel over the next five years, but Forrester doesn't see it overtaking search or display in that span because social ad measurement still has to mature.
"Marketers are deliberately choosing tools that are more measurable [than social], that they have more experience with and that have a more obvious direct-response value. And they're still trying to get to the place where they can measure how social media is going to pay off for them," Ms. VanBoskirk said. Conversely email marketing is considered more measurable than social and "the workhorse of most marketers' toolkits," she added, but is so cheap that "it is never going to be the lion's share of a budget."
While digital ad spending surpassing $100 billion would be a milestone, the mark could have been bigger if it weren't for the category cannibalizing itself. Brands will be putting more money toward digital advertising, but they'll also be shelling out to create content, a cost that Forrester does not include in its estimates. And some brands will find a way to hang on to their money by distributing that content for free on digital channels like Facebook, Twitter and YouTube as well as on the brands' own properties.
"This is a $100 billion forecast, not a $150 billion forecast, because companies are starting to realize that paid media is not always the best investment for the comprehensive customer experiences they want to create," Ms. VanBoskirk said.