07 Sep Business would be wise to note the resurrection of online ads
As Mark Twain said, “The report of my death was an exaggeration.” The same could be said for online advertising, which was all but buried in 2000 after the dotcom crash, only to find rebirth and rapid growth over the subsequent years as advertisers and consumers connect with all things digital.
Digital ads on a range of devices are taking off with more personal, relevant, and intrusive ads delivered by the content providers we use for entertainment, information, commerce, and communications. This acceleration in advertising spending is being driven by the shift in media consumption to the digital world. On the production side, today’s online strategies are connecting with enhanced creativity, better metrics, increased personalization, and greater campaign integration across the marketing mix.
Not to be left behind, content providers, advertising agencies, and search engines are on the hunt to build up their offerings to capture a piece of this growing pie.
Whether pay-per-click, contextual or behaviorally targeted ads, online advertising is gaining in the race to generate consumption. From the emerging BRIC countries (Brazil, Russia, India, and China) to the developed Western world, digital ads are rapidly growing and moving up in the mix of advertising techniques. A wide number of versions of these ads are being created and released to connect with audiences based on matching their individual profiles with the most appropriate offer and message to meet their desires, to capitalize on their prior message exposure, and to integrate with their stage in the buying process.
For 2006, the Interactive Advertising Bureau (IAB – the online advertising industry association) and Pricewaterhouse Coopers estimate that of the $16.9 billion being spent online, the big winner was search or keyword purchases at 44 percent of the total (sure wish I had bought some Google stock!), followed by display ads, 22 percent; classifieds, 16 percent; lead generation, eight percent; rich media, seven percent; sponsorships, three percent; and e-mail, two percent.
Veronis Suhler and Stevenson, a private equity firm focused on the communications, advertising, education, and information industries, revealed in their popular Communications Forecast 2007 – 2011 that U.S. online advertising will grow at an annual rate of over 21 percent to reach $62 billion by 2011, resulting in $2 billion more dollars spent online than on newspaper advertising. This estimate is exceeded by the $73.1 billion that Pricewaterhouse Coopers is projecting in the same time period.
The shift is having interesting consequences for traditional media (print, out-of-home, television, direct mail, directory listings, etc.) as they look for ways to stay in the game with a new digital playbook. Some “traditional” players are joining the graveyard, like Business 2.0, a once high-flying, high-tech print publication that will be discontinued in October, according to the Associated Press.
Meanwhile, in a category of interest to local marketers, Yellow Page advertising, The Kelsey Group is estimating that online ads will grow to $2.3 billion from $.6 billion today, according to a recent eMarketer article.
New advertising techniques and placement strategies are being tested and implemented in blogs, social networks, online videos, wikis, mashups, and other web 2.0 delivery vehicles. For example, YouTube is introducing in-video overlay ads that appear in the lower fifth of videos supplied by their content partners. Viewers can select to launch a full advertising video clip while delaying the content.
According to the Financial Times, these ads were demonstrating click-through rates that were 5 to 10 times higher than other online formats. eMarketer is reporting that online video advertising will grow to $4.3 billion by 2011, an increase from the 2007 projection of $775 million.
Banner ads aren’t dead, either. They still account for $3.4 billion or 21 percent of total online ad spending in 2006, according to eMarketer. What is new are the creative ways that banner ads are being executed and the information that is being used to selectively deliver them based on consumer behavior or information context. Newer types of banner ads are being launched, including video ads (standard and expandable), microsites in a banner, out-of-banner or over-the-page ads, and between-the-page ads.
These newer ad formats are achieving higher CTR with DoubleClick reporting that video ads were achieving CTR of .4 percent to .74 percent vs. the dismal showing of traditional JPG or GIF ads of less than .1 percent.
Leading search providers Google and Yahoo! don’t want to be left behind as the action shifts from pay-per-click into other ad formats as evidenced by their recent acquisitions. Google acquired DoubleClick and Yahoo! snagged Aquantive and Blue Lithium, some of the leading players in the online advertising space.
In a quest for a piece of the action, ad agencies AKQA ($100 million revenue), iCrossing ($110 million revenue), and Publicis expanded their digital businesses with recent acquisitions of Searchrev, Proxicom, and Digitas, respectively, according to The Wall Street Journal and the New York Times.
So what does all this mean for your business?
If you are an advertiser, you’ll need to continue to monitor the online advertising space and begin to shift more of your advertising dollars online.
If you are a publisher, you’ll need to enhance your online content and make sure that you are delivering the types of ads that are connecting with your readers.
If you are an ad agency, you’ll need to continue to build expertise in this area and be ready to serve your clients both online and offline.
Ad budget capture
Needless to say, online advertising is not dead, but is resurrected and well on its way to capturing a larger share of advertising budgets.
Previous articles by Paul Gibler
• Paul Gibler: 583 reasons to wonder: Is e-mail dead or alive?
• Paul Gibler: Online retailing “tango” is adding some steps
• Outflanking the Google, Yahoo, MSN juggernaut
• Paul Gibler: On the case: Web lessons for connecting with customers
• Paul Gibler: Brand protection in the age of customer engagement
• Wireless wizardry coming to the small screen
• Paul Gibler: Podcasts – time, place, and player shifted media
• Paul Gibler: Virtual communities make online connections
• Paul Gibler: Lights, cameras, action: The state of online video
• Paul Gibler: Joining the wiki wacki world
• Paul Gibler: Would you like your music (and data) mashed?
• Paul Gibler: Cutting through the blog fog
• Paul Gibler: No RSS feed? You’re fired!
• Paul Gibler: Social computing in the Web 2.0 era
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