Online ad growth slowing to dotcom burst levels

Advertizing agencies have begun losing clients to platforms like Google. (AFP)
Updated 08 July 2019

Online ad growth slowing to dotcom burst levels

  • 47 percent of total global advertising spend accounts for internet advertising

LONDON: Global advertising spending is expected to grow 4.6 percent in 2019, a dip from previous estimates, with Internet advertising expected to slow to single digits in 2021 for first since the dotcom bubble burst, industry forecaster Zenith said.

Zenith, owned by French advertising group Publicis , said in a report published on Monday that internet advertising would account for 52 percent of global advertising expenditure in 2021, surpassing the 50 percent mark for the first time.

The report comes during the time when advertising companies, including market leader WPP Plc., have seen clients switching to using online platforms such as Google and Facebook to reach consumers instead of using traditional routes.

Big advertising groups have sometimes been viewed as behind the curve in terms of digital strategy. Former WPP boss Martin Sorrell’s S4 Capital bought San Francisco-based programmatic ad firm MightyHive in December, with a strategy to create a pure play in the world of digital media and advertising.

Currently, 47 percent of total global advertising spend accounts for internet advertising, according to Zenith, up from 44 percent last year, but the growth rate is expected to slow down considerably as the internet advertizing market continues to mature.

“2021 will be the first year of single-digit Internet adspend growth since 2001, the year the dotcom bubble burst,” Jonathan Barnard, head of Forecasting at Zenith, said.

However, while big brands still depend heavily on traditional media, local and smaller businesses spend much larger, if not all, of their budgets on newer social media platforms such as Google, Instagram, Twitter and Facebook. 

In contrast, large advertisers devote considerably less than half  of their budgets to online advertising on average.

Global overall advertising spending is expected to rise by in excess of $28 billion in 2019, Zenith added, saying that half of that would be from the US. China will be the next biggest contributor, followed by the UK and India, Zenith said.

Saudi Aramco shares soar at maximum 10% on market debut

Updated 59 min 4 sec ago

Saudi Aramco shares soar at maximum 10% on market debut

  • Company is now world’s largest publicly traded company, bigger than Apple
  • More than top five oil companies combined

RIYADH: Saudi Aramco shares opened at 35.2 riyals ($9.39) on Wednesday at the Kingdom’s stock exchange, 10 percent above their IPO price of 32 riyals, in their first day of trading following a record $26.5 billion initial public offering.
Aramco had earlier priced its IPO at 32 riyals ($8.53) per share, the high end of the target range, surpassing the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut.
Aramco’s earlier indicative debut price was seen at 35.2 riyals, 10 per cent above IPO price, raising the company’s valuation to $1.88 trillion, Refintiv data showed.
At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.
“Aramco today is the largest integrated oil and gas company in the world. Before Saudi Arabia was the only shareholder of the company, now there are 5 million shareholders including citizens, residents and investors,” said Yasir Al-Rumayyan, the managing director and chief executive of the Saudi Public Investment Fund.
“Aramco’s IPO will enhance the company’s governance and strengthen its standards.”
Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.
The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange earlier said it will hold an opening auction for Aramco shares for an hour from 9:30 a.m. followed by continuous trading, with price changes limited to plus or minus 10 percent.

The company said Friday it could exercise a “greenshoe” option, selling additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.
Two-thirds of the shares were offered to institutional investors. Saudi government bodies accounted for 13.2 percent of the institutional tranche, investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries such as tourism and entertainment.
Watch the video marking Aramco’s opening trading: