online advertising news
Carat revises Global Advertising Spending Forecast
Carat lowered its growth forecasts for global advertising expenditures in 2008 and 2009, predicting 4.9 percent growth in 2008 (vs. 6.0 percent it estimated in March) and a growth of 4.8 percent in 2009 (vs. a 4.9 percent estimate in March), writes Marketing Charts Inc.
The main driver of the reductions for 2008 is downward revisions for ad spend in four economies: the US, the UK, Spain and China. Elsewhere, the majority of the developed economies are predicted to contribute less than 5 percent growth, with the impetus - and double-digit growth - coming from emerging economies in Central and Eastern Europe, Central Asia and Latin America. It's clear that the worldwide economic issues affecting businesses are having an impact on where and how advertisers spend their money, said Jerry Buhlmann, CEO of Aegis Media.
Similarly, whilst TV's share of spend has stabilized, online advertising is continuing to drive spending ahead of other sectors in nearly every region. Internet is set to overtake radio this year to become the world's third most popular medium, behind TV and print, he added.
With search now central to the planning and execution of any campaign, online media brings a greater level of accountability not just to itself but to TV, print and other forms of advertising. This is why we are predicting further strong growth for internet, even when advertisers are cautious in many of the other sectors, Buhlmann concluded.
Breakdown by Medium
TV is set to grow this year and next ahead of 2007 performance levels. Similarly, cinema's growth is strong, but it comes from a very low base. Only newspapers are predicted to decline on a worldwide basis. Spending on online advertising continues to grow ahead of all other sectors, albeit not at the same rate as 2007, and Carat predicts that the slowdown in growth will continue through into 2009. The growth of the internet is primarily at the cost of print advertising spend, even though newspapers and magazines together still dwarf internet's share; meanwhile, TV is predicted to grow its share year-on-year in both 2008 and 2009.
Regional Breakdown
The trend for growth in developed regions - North America, Japan and Western Europe - remains below the global figure with 2-3 percent on average forecast for both 2008 and 2009. The global figure is lifted by the fast growth in emerging economies, most notably Russia (22.8 percent), India (21.0 percent) and Mexico (20.0 percent). Despite the downward revisions since March, China is still one of the fastest-growing markets for advertising with growth of 18.2 percent predicted for this year. For 2009, the fastest growth regions are Central and Eastern Europe at 15.2 percent and Latin America at 14.1 percent.
US, UK, China and Spain
Growth in the US is predicted to slow to 2.1 percent from Carat's earlier forecast of 3.8 percent, with newspapers, magazines and radio all declining this year - but there will be growth in TV, thanks to the presidential elections and the Olympics, and in the internet.
The UK's overall forecast has been cut from 4.3 percent to 2.5 percent, with a downward revision of 1.8 percent points.
China's growth has been revised downward by a percentage point for this year, as the true picture of the impact on 2008 of the May earthquake and what will happen to spending post-Olympics becomes clear. 2009 is forecast to see a more significant decline in growth, with forecasts down from 13.2 percent to 10.9 percent in what will become the world's third-largest advertising market.
However, Spain's ad spend forecasts have changed the most, down from 3.8 percent to -2.3 percent as a result of local macro-economic trends and the severe housing downturn. The majority of spend is coming out of newspapers, magazines and TV, with forecast declines of -6.2 percent, -4.5 percent and -3.9 percent respectively. The internet is predicted to grow by 25 percent to make up 7.1 percent of total spend in the country. The Spanish economy is expected to pick up again in late 2009 with -0.8 percent growth forecast.
Intel's Growth Focused On Digital TV, Internet Advertising
Pairing integrated processors with media partnerships could help the chipmaker tap into the $51.1 billion Internet advertising market predicted for 2012.
August 20, 2008
TV, the longtime powerhouse in advertising, is poised to get much stronger as a result of the Internet.
That was the consensus of a panel discussion at the Intel Developer Forum that followed the introduction of a new system on a chip for digital TVs and other consumer electronics. Intel (NSDQ: INTC) unveiled Media Processor CE 3100, formerly code-named Canmore, along with a new software framework from Yahoo (NSDQ: YHOO) for delivering the Web to the TV screen.
More Personal Tech InsightsWhite PapersKleer Advantages Over Bluetooth Why Virtual Worlds Can Matter Internet advertising is on track to surpass newspapers, cable TV, and broadcast TV by 2012, according to IDC. The analyst firm predicts that overall revenue from the Internet will double to $51.1 billion in four years from $25.5 billion last year.
But the line between the Internet and TV is blurring with the introduction of software like Yahoo's Widget Channel. The user interface makes it possible to access Web services, such as news, sports, online video, photo services, or social networks, on the same large TV screen where people could also be watching a movie or their favorite TV show.
Such a product opens up a huge advertising opportunity, because it's able to reach people as they watch their favorite medium for entertainment -- the large-screen TV.
"It puts television not on an even footing with the Internet, but it could leapfrog it," said panelist Irwin Gotlieb, chief executive of GroupM, a media advertising management company.
Gotlieb said blending TV and the Web will make it possible to target groups of people like never before. "Targeting improves relevance and relevance improves effectiveness," he said.
Others agreed, saying that new Web-accessing technology is becoming less intrusive, which means it's more likely to be accepted by the TV audience. "We're not altering the TV experience," said Albert Cheng, executive VP for digital media at Disney (NYSE: DIS)- ABC Television Group. "We're enhancing it."
Tony Werner, chief technology officer for cable company Comcast (NSDQ: CMCSA), said a major benefit with Intel's technology is the use of the x86 architecture, an industry standard. Developers building software for the Intel platform for the PC can quickly move that software to a mobile Internet device or a digital TV with one of the chipmaker's products.
"The idea of writing an application once and having it play on all environments is incredible," Werner said.
Intel plans to ship the CE 3100 SoC next month. Intel's next generation of SoC for consumer electronics, code-named Sodaville and based on its new Atom processor, is scheduled for release next year.
Other members of the panel included Tasuku Yazaki, general manager of product planning of the Vaio division at Sony (NYSE: SNE). Eric Kim, VP and general manager of the Digital Home Group at Intel, hosted the discussion during his IDF keynote.
A weakened economy likely won’t hurt Online advertising will thrive despite economy, Jupiter says
August 1st, 2008
A weakened economy likely won’t hurt online ad spending, as retailers and other online marketers shift more of their marketing budget toward the more accountable and ROI-driven online channel, according to a new report from JupiterResearch LLC., which predicts that total online ad spending will grow 20% from last year to reach $23.8 billion this year.
Jupiter’s “U.S. Online Advertising Forecast, 2008 to 2013,” also predicts that online advertising spending including search, display and classified ads will increase at a compound annual growth rate of 13% to $43.4 billion in 2013. By contrast, offline ad spending will increase at a compound annual growth rate of only 4% during that time.
By far, search will continue to account for the largest share of online advertising over the next five years, reaching $20.9 billion from $9.1 billion in 2007, according to Jupiter. However, growth in search advertising spending in the short term will slow as the paid search market matures and as the result of Google’s recent Quality Score Initiative that bans low-quality ads from the search engine; that is, ads that simply lead to pages with more ads, Jupiter says. Jupiter predicts that costs per click on Google will rise as a consequence.
Spending on online display advertising will grow at a compound annual growth rate of 14% over the next five years, Jupiter predicts. Improvements in targeting technology will help increase the CPM (cost per thousand impressions) paid by online advertisers. Spending will shift away from static ads as advertisers pursue rich media and video ads, with Jupiter predicting that video ad spending will more than quadruple from $0.7 billion this year to $3.4 billion in 2013.
Online advertising surpasses radio commercials in Germany.
July 15th, 2008
Hamburg - Online advertising revenue surpassed radio commercials sales in Germany this year for the first time, according to Nielsen Media Research figures Tuesday that underlined the growing importance of the internet.
Nielsen assessed German spending on online ads in the first six months at 665 million euros (1.04 billion dollars), a year-on-year jump of 40 per cent. Radio commercials were steady at 627 million euros.
However, online advertising placements were still outstripped 15 times over by traditional advertising. Revenues for newspapers, magazines and broadcasters from advertising in the first half totalled 10 million euros, Nielsen said in Hamburg.
Google woos Family Guy, Seth MacFarlane
July 5th, 2008
WEB search and advertising company Google has signed a deal with Seth MacFarlane, 34, creator of the Fox animated TV show Family Guy to produce short cartoons for the web.
Google spokesman Daniel Rubin announced this week the cartoons will be paired with Google's AdSense advertisements placed on targeted websites, and will also be available on the Google-owned video-sharing site YouTube.
The series, titled Seth MacFarlane’s Cavalcade of Cartoon Comedy, will consist of 50 clips no longer than two minutes.
Each clip will have a variety of short ads embedded in them, with MacFarlane receiving a percentage of ad revenue.
MacFarlane is one of the highest-paid talents in TV after this year signing a deal reported to have been worth at least $US100 million ($105.24 million) with 20th Century Fox TV, a unit of News Corp.
While the internet has many players producing content exclusively for the web, it has few creators with the production budget and pay scale MacFarlane is accustomed to.
Major entertainment companies have increasingly tried to expand into the web in recent years.
In 2005, News Corp - the parent company of the publisher of NEWS.com.au - bought US social networking site MySpace for $US580 million ($610.39 million), and it has since rolled out different versions in other countries.
Last year, NBC Universal, which is operated by General Electric, teamed up with News Corp to found Hulu.com, a site that relies on advertising to bring users free episodes of their favourite shows on the internet.
While relying on advertising to underwrite the cost of programming has worked on TV since its inception, the approach is still meeting with mixed results online.
In another high-profile initiative, Sony Pictures Entertainment, a unit of Sony Corp, this week announced plans to make the Will Smith action film Hancock available online to owners of the web-connected Sony Bravia TV before the movie goes out on DVD.
In doing so, the studio will change, albeit slightly, the traditional distribution chain of motion pictures. After their initial run in cinemas, movies are typically released on pay-per-view television services, then via DVD, internet downloads or streams, and finally on free broadcast TV. The new initiatives highlight how old media is using the internet as a critical tool for reaching customers.
Seth MacFarlane’s Cavalcade of Cartoon Comedy will launch in September.
Google aims to rule advertising world
Wednesday, June 25th, 2008
Grant Surridge, Canwest News Service
TORONTO - Google Inc. became one of the world's most famous companies by helping people find what they want on the Internet as quickly and easily as possible. Now the tech giant is poised to do the same for advertisers.
Google unveiled the details of its Ad Planner service June 24 in New York, with some observers saying it has the potential to revolutionize how companies spend their online advertising budgets and rival established web traffic measuring companies like ComScore Inc. and Nielsen Online.
"One of the barriers, no question, has been the lack of bulletproof measurements," said Toronto-based technology consultant Kaan Yigit. He referred to the skepticism about the accuracy of established Web traffic measuring companies that has held back online advertising spending.
But there are also a myriad of explosive issues surrounding Ad Planner and a company that is already the destination for so many online advertising dollars.
Foremost is Google becoming involved in advising companies on how to spend those advertising budgets.
"Once you control a whole lot of money, and then you try to control how the rest of it is spent, in effect that could be seen as restraint of trade," said Rob Enderle, president of market research firm Enderle Group in California. Representatives from Google declined to be interviewed.
Google's new service will differ from competitors like ComScore and Nielsen in that it will use automated web servers to track the way people surf the Internet.
Existing services largely rely on what is called panel tracking. In much the same way as TV ratings are compiled, a sample of web users volunteer to have their online habits tracked over a period of time.
The accuracy of panel tracking has been questioned in several quarters, as some believe that people self-censor their Internet habits when they are being watched.
The biggest advantage server-based measurement would have is that it would allow for more in-depth measurement, and potentially provide more accurate information about the viewing statistics for smaller sites with less traffic.
Armed with such information, Google could then create plans for companies to best optimize their online advertising dollars.
For example, a company may elect to advertise with a host of smaller sites instead of just one large one, because it would better target their demographic.
Another factor working against Ad Planner is that because Google collects so much of its revenue from advertising, companies may believe the new service is biased, said Enderle. He said the Internet giant may be better off positioning the service as an arms-length company and believes this will force Google to strive for a transparent means of showing how the data is collected.
Companies may also worry that Google could use information garnered from one ad campaign and then give that same information to a competitor, he said.
Given the way Google has positioned itself as an information company, the move into measuring and analyzing web traffic was bound to happen sooner of later, said New York-based Internet equity analyst Colin Gillis.
"When you take that as the over arching context of what they're trying to do, this is of course a natural extension," he said.
© Financial Post 2008
Google admits it still cannot make money from YouTube.com.
June, 2008, by Sarah Arnott
Almost two years after it paid $1.65bn (£848m) for the YouTube video-sharing site, Google still has not worked out how to make money from the business, its chairman and chief executive conceded, even though hundreds of millions of people visit it every day. In a public interview in San Francisco yesterday, Eric Schmidt said that Google while wants to change the world, it had yet to transform YouTube into a money-spinner.
"The goal of the company is not to monetise everything, our goal is to change the world – monetisation is a technology to pay for it," he said. It "seemed obvious" there should be "significant amounts of money" to be made from YouTube, he added, but the company has not yet come up with the formula.
While Google remains committed to retaining its hugely successful model of offering all services for free, the question of how sites such as YouTube can make the most of their enormous success does not yet have a satisfactory answer.
Mr Schmidt's admissions may come as a relief to critics who have become increasingly anxious about Google's worldwide dominance of the internet. Despite Google's much-vaunted "don't be evil" corporate slogan – which Mr Schmidt said was a joke designed to provoke internal ethical debate – the company's meteoric expansion into, most significantly, the online advertising market, is causing concerns about privacy for individuals and commercial organisations.
Still, Google is certainly looking for ways to make money from YouTube. It is due to launch video-based advertising of an unspecified new type on the site in the coming months, having already tried using banners and "in video" ads.
Although Mr Schmidt rejected accusations of market dominance on the grounds that Google only leads the market in search advertising – Yahoo wins on display ads – it is the future that worries both his company's rivals and some of its customers. Google takes a massive 85 per cent share of search advertising, and pockets some 50 per cent of the UK's total online advertising spend, which includes display, search and classified. Not content with auctioning sponsored links to run alongside its searches, Google is also taking over other links in the chain.
The $3.1bn (£1.6bn) takeover of DoubleClick that was cleared by regulators this spring, for example, creates a platform linking to any number of individual, smaller sites, as well as providing Google with an unprecedented amount of commercial data.
Google's dominance has also acted as a catalyst for an internet landgrab as technology companies such as Yahoo and Microsoft rush to reinvent themselves as advertising platforms – Yahoo through the $300m purchase of BlueLithium, Microsoft by buying Acquantive for $6bn – as the only way to hope to compete.
"Google is establishing a vast advertising ecosystem," said Nigel Gwilliam, of the Institute of Practitioners in Advertising.
Is the biggest online advertising deal about to happen?
May 27th, 2008
YHOO-MSFT-GOOG: Still Talking, Still No Deal - by Aaron Task
Still talking, still no deal is the bottom line of the ongoing Microsoft-Yahoo-Google saga after a long weekend many believed would bring a transaction of one kind or another.
To summarize: Takeover talks between Yahoo and Microsoft are ongoing to buy all (Yahoo's preference for the right price) or parts of the company (what Microsoft wants), writes Kara Swisher. Of course, discussions between Yahoo and Google for a search-ad outsourcing deal are also still on the back burner.
That said, there continue to be murmurs from within Google about whether such a deal with Yahoo is worth the likely regulatory scrutiny. Meanwhile, Yahoo's top brass -- including Sue Decker in her Tech Ticker appearance -- cooled on the Google outsourcing idea once Microsoft walked away.
In other words, the brinksmanship between and among these three companies continues apace, and there's still the unresolved issue of Carl Icahn's agitation.
Notably, Bill Gates, Steve Ballmer, Jerry Yang, and Decker are scheduled to appear at Swisher's D: All Things Digital conference, this week. Sarah Lacy is reporting from the conference, so stay tuned.
Why Yahoo! cannot go it alone.
May 20, 2008
By Elizabeth MacDonald
Could Yahoo! survive as a stand alone company, much less a web portal?
Getting the answer to this question now on the lips of Wall Street traders, and likely billionaire Carl Icahn who has sunk tens of millions of dollars into Yahoo!, shows how weak Yahoo!’s business is as it appears to be striving to go it alone and instead tries to strike an ad partnership with Google.
Microsoft now wants to buy only what it wants, Yahoo!’s search engine, while investing a minority stake in the rest. The idea apparently has met with a lukewarm response from Yahoo!, and is seen as pressure by Microsoft to put public pressure on Yahoo! not to pursue a separate search-ad deal with Google.
A deal for just Yahoo!’s search engine would clearly cost Microsoft much less, estimates have it at $21b, lower than a full $40b+ buyout Microsoft initially offered. Collins Stewart analyst Sandeep Aggarwal estimates Yahoo’s display advertising operations would be worth $14b and its international holdings at $9.25b.
But whether Yahoo! could survive as a stand alone company, or even as just a portal is a big question, the question of the hour.
It depends if Yahoo! ceo Jerry Yang and his cohort can succeed in their ambitious turnaround plan, a plan that would turn Yahoo! into a premier portal for Web surfers, the starting point for consumers logging on, and whether that would be enough to attract the advertising dollars that would supposedly follow them.
Yang staunchly believes the Sunnyvale-based company is on the brink of a turnaround that will prove he was right to turn down Microsoft, a turnaround he thinks will prove Yahoo! is really worth more $50b. Starting next year, Yang has (over)promised that Yahoo!’s net revenue will increase by 25% annually–more than doubling its recent rate of growth.
Here is the case both for and against Yahoo! as a stand alone company.
I said from the beginning, the day Micosoft’s offer to buy Yahoo! was announced, that the Microsoft-Yahoo! battle would be a fight over the deal’s value, that Microsoft would be seen to be overpaying for Yahoo! Internet trends, notably in ad spend, are just one part of the serious challenges Yang must contend with.
First, the overly optimistic–with emphasis on overly–view of long-term growth in Internet advertising.
Seemingly unbeknownst to the cheerleaders on Wall Street, Yahoo! has been in a bit of a profit slump, its operating expenses have been soaring, so the big question is, does Yahoo! have the wherewithal, the stamina, and the earnings power to turn its throng of users into a profitable portal?
The key here is how much a Yahoo! portal would get in the way of online advertising. The three companies, Yahoo!, Google and Microsoft are fighting over online advertising, thought to be worth about $40b a year and is expected to double by 2010.
However, there’s a serious debate about those numbers as they rosily factor in estimates about the amount of ad dollars spent on places like social networking sites and sites such as YouTube, when a growing number of analysts note that advertising doesn’t seem to work on such sites.
Who wants to waste time looking at distracting ads when you are talking to your friends or watching talking dogs videos? Don’t ad dollars matter more when people turn themselves into laser beams searching for furniture or pet medicine on line?
Also, Yahoo! has a confusing site that turns off users and its display ad results are not that strong. Yahoo! tosses its vast offerings at web surfers willy nilly, and makes users, including me, feel as if they are chasing gnats in a hurricane. I often wonder whether I am getting attention deficit disorder just by looking at its unfocused site, as I reach for the Ritalin. Instead, Google has more focus and seems to prioritize its offerings.
What Yahoo! has going for it is what it claims is its daunting amount of traffic, nearly 500 million unique users per month from around the planet. Also web surfers spend a lot of time on its site each month, since Yahoo! has one of the most popular e-mail services, as well as news, financial information, sports and music. Yahoo! visitors averaged just over three hours and 12 minutes on its site in March, according to Nielsen Online. It came in second to AOL, which averaged nearly four hours.
Google averaged less, about one hour and 16 minutes of time spent on-site by its average visitor, but the numbers show it is gaining fast. Of course, Google is tremendously efficient in extracting revenue from its visitors because of its dominant position in search, where it garnered a 68% market share in April compared with 20% for second-ranked Yahoo, according to Hitwise.
But another problem is Yahoo!’s display advertising business. That business has not been that strong. Plus this business may get worse. Recent data on advertising spend patterns show that online advertising buyers are moving toward search advertising and away from display ads. The New York Times says “the prices paid for online ads bought through ad networks dropped 23% from March to April, according to PubMatic.” That’s huge.
Also Yahoo! has been in a bit of a profit slump. Without huge paper gains from its stake in Alibaba, its net income and operating income would have been microscopic. See my prior blogs, “Why Microsoft Should NOT Up its Bid for Yahoo!” and “Why Carl Icahn May Fail at Yahoo!”
Also don’t buy into just yet the naively bruited about talk of a partnership between Yahoo! and Google, where Yahoo! would outsource at least some of its search advertising to Google and thus get $1b in extra cash flow.
This deal would let Google show some of its ads alongside Yahoo!’s search results. But glowing talk of such a deal ignores the fact that it could easily be stopped. Such talk underestimates the power of the anti-trust cops in Washington, DC as well as opposition from Microsoft’s top executives, including chief exec Steve Ballmer, who is not shy about attacking mergers between competitors as monopolistic to the anti-trust squads in Washington and overseas.
Any partnership between Google and Yahoo! would surely face antitrust obstacles as the two companies would command more than 80% of the U.S. search advertising market. With Yahoo!’s share price still trading with a merger premium built in, as if a merger or some kind of deal is inevitable, the real question now is whether shares in Yahoo! will fly south faster than a goose in winter if Yang stubbornly opts to chart an independent course for the company he co-founded.
What are the barriers to advertising online?
We ‘asked the experts’ at this IAB event.
April 2008
As part of the IAB’s remit to help grow the internet marketing industry, we thought it would be useful host an event where a panel of industry experts could discuss the possible impediments to the continued growth of the medium. We structured the seminar in a way that enabled delegates and visitors to our site in the lead up to the event to pose their own questions and concerns around the subject to our panel.
Our genius bar of online advertising experts contained our very own Guy Phillipson, Andrew Bradford of AOL, LBi’s Jo Simmonds and, representing the client side of the equation, Scott Gallacher of BSkyB.
Here is a brief outline of what these experts saw as the main barriers to advertising online:
1. Guy Phillipson pinpointed the various ‘digital divides’ as an important issue that needs to be bridged. The divide between consumers online and not online, the varying degrees of advertiser knowledge from the early adopters to those who have merely experimented with the medium and the agency divide – the knowledge gap between traditional and digital and how this impacts on integrated campaigns.
2. Gallacher believes that resources and proof are the two main impediments to online advertising. He argued that advertisers were reluctant to take resources from their traditional marketing plans that are working for them and put them into online advertising, particularly as he thinks despite all the measurement metrics at our disposal advertiser’s still lack proof of the efficacy of the medium. Clearly there is still a lack of trust issue when it comes to online advertising.
3. Andrew Bradford opened with the point that the internet is still an immature format, ‘we are like what TV was in the late fifties’ he said. Bradford went on to say that a lot of work had to be done to educate the industry of the complexities of the medium and that you could have the best creative advertising in the world, but if you weren’t managing your reputation and what your consumer was saying about you online it would be for nothing.
4. Jo Simmonds stated that a ‘skills shortage’ is common place within many agencies and it will many years before agencies have planners that can coordinate the strategy for all parts of an integrated campaign. She also argued that digital was still being considered too late in the briefing process. Simmonds concluded by saying that there was not enough great work, or examples of agencies ‘going the extra mile’ to show advertisers online was worthy of their increased investment. Nobody knows how to make money in online advertising. Can you get that folks?
... and here are the really really big questions.
1. What do you think about the quality of digital brand building work online? Is it up to the same standards of traditional advertising?
Scott Gallacher argued that direct marketing may be ugly but it delivers results for the boardroom. Joe Simmonds’ agency perspective on the issue was that too often agencies are asked to deliver a watered down online version of the above the line work and again, there is a problem with the briefing process.
2. Are we being too ambitious and making online advertising more complicated than it needs to be?
Andrew Bradford agreed that there were a lot of skill sets in online and that there was a need for, simplification and explanation instead of education, but he argued that it is was the complexities that made internet marketing attractive. Scott Gallacher said that the internet was not regarded as an advertising medium in the sense that consumers don’t necessarily come to online for advertising compared to TV where it’s imprinted within the structure. Scott also remarked on the ‘silo effect’ in organizations between all the different parts from the product, search, display, affiliate marketing, video and as well as social media where appropriate. All these ‘different components need to be married together’.
3. Is it just a lack of knowledge that is the real barrier to online advertising, or is there a lack of knowledge with regards to brand building in online advertising agencies?
Jo Simmonds responded by saying that the internet is exciting, but complex, with a lot to it. The immigrants from above the line are yet to be fully educated of all its internal workings and there are very few ‘uber planners’ but she believes that we are starting to see a blurring of the lines.
4. Do you think using traditional advertising agencies is a hindrance to online advertising?
The consensus of the panel was that the migration of personnel from traditional to digital media was a good thing because of the insights and big brand ideas that were being brought into the online advertising realm. Scott Gallacher raised a slight concern that talent from offline traditional advertising agencies might not have the breadth of knowledge required to initially have an impact in an online advertising world.
5. There is this belief that you have to click on an ad to be engaged with it. Does the panel have an opinion on this?
The event chair, Kieron Matthews, was first to respond to this question saying that there are some kinds of ads online that someone might never click on, but you are aware of. A point Andrew Bradford picked up on by saying we make conscious and subconscious decisions about ads that are served, taking them in as either a good or bad memory. He added the subconscious intake of adverts are inherent to everyone within the audience, although someone may not consciously look at an ad, it will most likely be picked up by the brain and effect the consumer later down the road when they may come across that brand - or so the online advertising theory goes.
Guy Phillipson added that online video has changed the online adveritising game in terms of allowing the internet to be viewed more as brand building medium. Scott Gallacher concluded this particular question by saying that if we stopped now with our achievements with skyscrapers and buttons then we would not be fulfilling the medium’s potential. For example banner advertising by some companies will simply offer the option ‘to buy or not to buy’. Although this method may sift customers who have no interest in the product, it ultimately deters other consumers in the future who may decide to go for a competitor who runs a more appealing campaign. People need to be intrigued by advertising to take that step through the window. He said that click-through rates might be a very measurable commodity but added, “we are drowning in data, but devoid of insights.”
6. On the subject of behavioural targeting consumers still perceive it as illegal. How do we give consumers reassurance that behavioural targeting is in their interest?
The ‘disclosure versus reward’ was pointed out by Andrew Bradford as being the equation for behavioural targeting, if consumers are not receiving anything in return for providing data ‘they simply won’t disclose their information’. Scott Gallacher added that ‘consumers don’t trust marketers with all their information’, and that they should have the chance to view information held about them.
Jo Simmonds added that the internet has created a ‘generational gap’. Online advertising is an on going diary for a lot of young people on social network sites like Facebook, Bebo and Myspace and many will not think twice about entering their personal information online. Whereas there are still older consumers who are still very suspicious of even purchasing a product online.
7. What should media owners do to convince people to advertise online?
Jo Simmonds said a closer collaborative relationship is needed between the advertiser and media agencies to show what can be done with the medium.
8. One of the perceived barriers to online advertising is a lack of time in the planning process? Does the panel believe this is still the case?
Kieron Matthews said through his experience on TV, an 18 month turn around for a piece of creativity is the norm, whereas online usually has as little as three weeks from idea to completion. This is a factor in the quality of creative as it leaves little time to produce and deliver a smart and original piece of work. Kieron added that by shooting your online advertising assets at the same time and at the same location as your ATL, it saves time, money and effort in the long run.
Despite the event raising lots of potential barriers to the continued growth of internet marketing, all of the impediments discussed could be resolved either by increased communication or with the growing maturity of the medium. The conversations and debates could have raged on into the night and the audience were sent away wanting more.
LONDON - According to the latest report by Strategy Analytics, global expenditure on online advertising rose by nearly a third to $47.5 billion in 2007 and is set to pass the $100 billion mark by 2012. The report entitled Online Advertising: Global Market Forecast, notes that while web video commercials are a relatively recent innovation, they already generated revenues $1 billion last year, and are expected to be the fasting growing online ad format, reaching $7 billion by 2012 at an average annual growth rate of 48%.
Increased broadband speeds and rampant growth of all forms of online video in 2007 have created a foundation for web video commercials, comments Martin Olausson, Director of Digital Media Research at Strategy Analytics. However, while this emerging genre has great growth potential, it will continue to be dwarfed by the power of search and banner formats for the next five years.
Wider adoption of broadband internet services will help drive online advertising revenues towards $101.3bn by 2012 at an average annual growth rate of 16.3%. The report provides a five-year outlook for global and regional online advertising expenditure across N. America, W. Europe, CE. Europe, APAC and CALA, and segments revenues by Classifieds, Search, Display Ads, Rich Media Ads and Web Video Commercials.
NEW YORK--The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) today announced that Internet advertising revenues exceeded $5.2 billion for the third quarter of 2007, representing yet another historic high for a quarter and a $1.1 billion increase, or 25.3 percent, over Q3 2006. The results, published in the IAB Internet Advertising Revenue Report, are nearly 3 percent higher than Q2 2007, itself the last record-setting quarter. All three quarters in 2007 have set new highs—Q1 at $4.9 billion, Q2 at $5.1 billion, and now Q3 at $5.2 billion. Revenues for the first nine months of 2007 totaled $15.2 billion, up nearly 26 percent over the $12.1 billion recorded during the first nine months of 2006.
The continued robust growth of the industry indicates that marketers increasingly understand and appreciate the benefits of interactive advertising, said Randall Rothenberg, President and CEO of the IAB. Marketers large and small have come to accept digital media as the fulcrum of any marketing strategy.
Internet advertising revenues are on an annual run-rate exceeding $20 billion, further demonstrating the industry has truly come into its own, said Peter Petrusky, director, Entertainment, Media and Communications Practice, PricewaterhouseCoopers. The emergence of new platforms, including broadband video, rich Internet applications, mobile, and social media promise to deliver new benefits for consumers, and create exciting new venues for marketers to realize value in digital media.
The results of the survey continue to underscore the value that interactive advertising brings to the marketplace, as marketers and agencies build on established guidelines and best practices to control costs and maximize returns from their growing interactive budgets, added David Silverman, partner, Assurance, PricewaterhouseCoopers.
Conducted by PricewaterhouseCoopers, the IAB Internet Advertising Revenue Report was started by the IAB in 1996, and represents data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising.
First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data, respectively. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.
The IAB sponsors the IAB Internet Advertising Revenue Report, which is conducted independently by PricewaterhouseCoopers. The full report is issued twice yearly for full and half-year data, and top-line quarterly estimates are issued for the first and third quarters.
Fears of Mortgage Fallout May Hit Online Advertising - the evolving mortgage crisis could threaten the fast pace of online spending from mortgage lender Countrywide Financial (nyse: CFC - news - people ), argues Paul R. La Monica.
Netratings estimates that the company spent $34.8 million on internet advertising in July alone, and since the company has announced plans to scale back its business, it has reason cut back in this area.
Countrywide stock has been getting crushed all week on concerns about the health of its business.
Of course, Countrywide is far from the only mortgage-related firm to advertise heavily across the net.
Still, if there is trouble, nobody is letting on just yet.
Yesterday, financial information site Bankrate (nasdaq: RATE - news - people ) put out a release affirming the company’s existing guidance in a move to quell investor worries.
It too has seen its stock fall sharply in recent weeks.
The company specifically addressed the advertising question, saying “Given the volatility in the financial markets, we want to affirm our financial guidance to update investors on our progress...Our business remains strong; traffic and advertiser demand for both our rate table and display business is tracking as expected.”
Ad spend growth to slow, study says
Spending towards internet advertising will increase by 34 per cent this year, but slow to 30 per cent during 2008 as broadband take-up and growth and the amount of time consumers spend online reach a limit, a new report claimed this week.
Media investment management firm GroupM said that overall media and marketing spend would grow by almost three per cent to £26 billion in 2007.
It claimed the industry would rely on increased internet spending for most of its growth, while traditional advertising media would likely underperform in the long term.
The report suggested that zero per cent growth was expected in spending towards TV advertising during the next two years, while radio spending would see zero per cent growth this year, rising to one per cent next year.
GroupM also noted that advertising on the internet was larger than most people predicted because advertising on all websites has never been measured conclusively and neither has investment from advertisers in their online content.
Internet Advertising Revenues Grow 35 percent in 2006.
Fourth Quarter 2006 Revenues Total $4.8 Billion, Marking Highest Revenue Quarter Ever
NEW YORK (BUSINESS WIRE) The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) today released the Internet Advertising Revenue Report which shows record results for the full year and final quarter of 2006. Internet advertising revenues in the U.S. continued upward totaling $16.9 billion in 2006, a new annual record exceeding 2005 by 35%. Q4 2006 internet advertising revenues totaled $4.8 billion, representing record revenues for a single quarter and a 35% increase over same period in 2005.
Interactive advertising revenues continue to show solid growth as advertisers and agencies recognize that it is a medium that can uniquely affect consumer behavior from product awareness, to purchase intent, to actual purchase and then brand loyalty, said Randall Rothenberg, President and CEO of the IAB. We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers.
The report states that search, display, classifieds and lead generation all continue to grow at a healthy rate with an increase in both performance-based and CPM or impression-based pricing. Consumer advertisers continue to represent the largest category of internet advertising spending.
The continuing strong growth of interactive advertising as evidenced by the full year 2006 survey results proves the importance of this medium to all types of marketers, says David Silverman, partner, Assurance, PricewaterhouseCoopers. The ability for these marketers to achieve both performance-based and branding objectives with interactive advertising is the foundation for this exceptional growth.
The results for 2006 show the internet continues to offer marketers the widest spectrum of advertising formats, from search-based text ads to dynamic rich-media and broadband video ads, notes Peter Petrusky, director, Advisory, PricewaterhouseCoopers. Online publishers may continue to experience growth as marketing budget allocations to all interactive forms continue to increase.
Conducted by the New Media Group of PricewaterhouseCoopers, the Advertising Revenue Report was launched in 1996 by the IAB, and aggregates data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues with the data compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.
A copy of the full report is available at IAB.
The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The full report is issued twice yearly for full and half-year data, and top-line quarterly figures are issued for the first and third quarters.
About PricewaterhouseCoopers:
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
About the IAB:
Founded in 1996, the Interactive Advertising Bureau (www.iab.net) represents over 300 leading interactive companies that actively engage in, and support the sale of interactive advertising. IAB members are responsible for selling over 86% of online advertising in the United States. On behalf of its members, the IAB evaluates and recommends standards and practices; fields interactive effectiveness research, and educates the advertising industry about interactive advertising.
Is there money in all this online advertising?
Jefferies: Online Advertising Spending Could Exceed $60B By 2010
BUOYED BY GROWTH IN SEARCH, along with strength in display advertising, investment bank Jefferies & Co. raised its estimates for the worldwide online advertising industry to more than $60 billion by 2010--up from the $54 billion it projected in 2006. The bank also revised its estimates of $26 billion in total revenues for fiscal year 2006 to $30 billion, up 34% year-over-year.
Jefferies released its revised estimates and offered additional insights into the online ad market on Wednesday at its 3rd Annual Internet Conference.
Jefferies' estimates for the sector, which are among the most bullish, come as eMarketer earlier this week projected that online ad spending will slow to less than 19% this year after three straight years of more than 30% gains.
It's no secret that search is fueling a lot of the growth in online advertising: Jefferies projects it will reach $14 billion for fiscal year 2006, with a 25% compound annual growth rate through 2010. It says search will account for nearly half of all ad dollars spent online.
Display or brand advertising online--including non-search segments such as classifieds and lead generation--will experience a 19% compound annual growth rate through 2010, driven in part by traditional advertisers shifting at least a portion of their ad budgets online, according to the bank.
Attributing its forecast revisions to the fact that the online channel is quickly becoming a mainstream marketing channel with proven return on investment, Jefferies pinpoints the online advertising segment at nearly $30 billion globally and $16 billion in the U.S..
Still, it says online represented just 6% of total ad spending in the U.S. However, that trend will shift as advertiser dollars increasingly migrate online; Jefferies projects that online will represent nearly 10% of total ad spending in the U.S. by 2010.
Search advertising reached nearly $14 billion globally in 2006--and will continue to grow, but at a slower rate of 25% through 2010. Search accounted for 46% of all ad dollars spent online in 2006. Brand or display advertising represented $16 billion in revenues and accounted for 54% of all online ad dollars in 2006; Jefferies projects it will grow at a 20% clip through 2010.
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