Ad Spending Hits a New High as Search Ads, Out-of-Home and Amazon Rise

By Nat Ives 

Marketers drove U.S. advertising spending to a new peak last year, fueled by several large ad events -- the Winter Olympics, the World Cup and the midterm elections -- as well as demand for keyword-search and out-of-home ads.

U.S. ad spending totaled $212.4 billion in 2018, up 9.6% from the year before, according to a new report from Magna, topping the ad-buying group's earlier prediction that U.S. ad spending would rise 7.5% to $208.1 billion. It was the ninth consecutive year of growth.

Search-ad spending surged 22.5% to $53.5 billion, aided by enhancements to search-result displays and other advances, according to Vincent Létang, executive vice president of global market intelligence at Magna, which is part of the Interpublic Group of Cos. "It may not be in the spotlight as much as social media or digital media, but it keeps improving, especially in the last few years," he said.

Search has grown between 17% and 20% in recent years by Magna's calculations. "We expected that growth rate to slow down somewhat and instead it accelerated," Mr. Létang said.

Brands also are pouring more money into Amazon.com Inc.'s paid search ads.

Amazon more than doubled its ad revenue to roughly $6 billion in 2018, Magna said. Amazon has been rapidly increasing its offerings to marketers, empowered by its data on consumers' shopping habits and its direct role in actual sales.

Amazon also increased its own ad outlay by 50% last year to join the country's top 10 ad spenders, Magna estimated, ranking the company at No. 6 behind Procter & Gamble Co., AT&T Inc., Berkshire Hathaway Inc.'s Geico, Comcast Corp. and General Motors Co.

Spending on out-of-home advertising channels such as billboards, cinema ads, and video screens in elevators and at gas pumps rose 4.3% to $8.2 billion, Magna said, partly on the strength of new interest from technology companies and direct-to-consumer brands that are expanding beyond their roots in social media.

The spread of digital screens and the erosion of other ad channels' audiences also helped out-of-home advertising, Mr. Létang said. "Some demographic targets are increasingly difficult to reach through television or print, but they're still reachable through out-of-home, and sometimes in a more cost-efficient way," he said.

Excluding cyclical events such as the Olympics, U.S. ad spending in 2018 rose 7.3% to $207.5 billion, Magna said.

Marketers will spend some $217 billion on advertising in 2019, Magna predicted, an increase of 1.9%, or 4.1% excluding cyclical effects.

Write to Nat Ives at [e-mail]

(END) Dow Jones Newswires

April 05, 2019 07:14 ET (11:14 GMT)

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