What’s in Store for Digital Ad Spend?

Posted on Thursday, March 29th, 2012 by Print This Post Print This Post

Categories - Display, Featured, Mobile, SEM, Social Media, Video

Year in and year out, all online marketers hear is that our industry is growing – rapidly.  Like most others, I am more interested in understanding “how fast?”, “in what areas?”, and “how does this impact me?”  Well, divine intervention managed to align a webinar entitled “Digital Ad Trends – What’s Behind the Spending Boom?” with the only hour open on my schedule this past Thursday. Just to recap:

  • Online ad spending growth is projected at 23.3% for 2012 – driven mainly by factors themed around the concept of “more”:
    • Time: consumer time spent on digital is rising
    • Inventory: a result of more visits, sites, and time
    • Measurable: the need to be accountable by advertisers
    • Video: professional content to support ads
    • Brands: entry points increasing
    • Dollars: budget focus makes digital central
  • Imbalance in the marketplace is prevalent with the rich getting richer.
    • The top 5 companies by ad revenue comprise 66.9% of the total online ad revenues in 2011. HOWEVER, Google accounts for 44.9% of the total ad revenue, a 2/3 share amongst the top 5 companies by ad revenue.
    • Search spend accounts for almost 49.4% of ad spending share by format, with banners accounting for 23.4% and video accounting for 7.9%. HOWEVER, video is expected to grow by 54.7% in 2012 vs. 27% for search and 19% for banners.
  • Display advertising (banners, videos, rich media, and sponsorships) growth is being fueled by video, social and mobile – growing at 24.1% for 2012.
    • Factoring out mobile display and social ad spend (excluding apps and games), display will only grow 15.2%.
  • Video is expected to account for 20% of display advertising spend in 2012, and grow to 34.9% of display ad spending by 2016.  Growth will be at the expense of banners and rich media.
    • Desktop video ad spending is expected to grow from $2.97B in 2012 to $8.22 B in 2016 – a growth of 176.8%.
    • Mobile Video ad spending is expected to grow from $0.15B in 2012 to $1.08B in 2016 – a growth of 614.8%.
    • Search is a true ‘opt-in’ advertising model… and while it is rooted in direct response, search is as much a discovery/upper-funnel channel.
  • Social network ad revenues are expected to grow 43.0% in 2012, 30.4% in 2013, and 18.0% in 2014.
    • Facebook represents 71.1% of total social ad revenues in 2012 and will slightly decrease to 67.0% in 2014 – resulting from the introduction of new social platforms.
  • Mobile ad spending will increase from $1.45B in 2011 to $2.61B in 2012 – a growth of 80%.
    • Video, search, and banners (incl. rich media) account for the strongest growth with SMS/MMS contributing minimal impact to growth.
    • Mobile ad spending share by format is led by search at 49% (holding steady) share, followed by banners and rich media at 33% (growing), video with 5.8% (growing) and SMS/MMS at 12.2% (declining) in 2012.

While the above stats might be dizzying to walk through, as online marketers there are some key takeaways:

  • Account for brand focused initiatives in your traditional direct response focused channels, like paid search.  With ad spending shifting to online, the line between brand and direct response focused campaigns will continue to blur.  Channels like paid search, even today, act as a mechanism for discovery or awareness for a brand.
  • Be cognizant of emerging ad formats and channels as you prepare content schedules and campaign plans.  Engaging content for video and social takes careful planning to curate.  Allocate space in your budget for creative development in these channels.
  • Understand the role that these channels will play in your marketing mix before diving in.  Establishing clear KPI’s for each channel (beyond final conversion, such as engagement or lead focused activities) will help you as a marketer understand the path to conversion for your audience.

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