Video Ad Spending: Moving From TV To Online

Video is the fastest-growing digital ad format according to eMarketer. US digital video ad spend is expected to rise by 41.4% this year and by nearly 40% next year as well, when outlays will reach $5.7 billion.

Findings from the Interactive Advertising Bureau (IAB) show that much of that increased digital video spending will come out of former TV budgets. Seventy percent of buy-side US senior executives told the IAB they would likely move TV dollars to digital video in the coming year. An even greater 75% of all US senior executives surveyed said the same, suggesting there is significant excitement around digital video from all corners. However, those on the buy side may be slightly more realistic about how budgets will really move.

As to which digital video ad formats would likely see the biggest bumps in investment, an April 2013 study from Be On, a division of AOL, found that 73% of marketers polled worldwide expected to increase spending on pre-roll ads over the next 12 months. Social video ads came in second, at 53% of respondents.

Putting dollars to digital video, though, does not have to mean leaving TV behind, and there are increasing opportunities for cross-platform ad campaigns, something marketers seem particularly excited about.

According to the IAB, nearly two-thirds of respondents who had previously launched cross-platform ad buys seemed happy enough with their results that they said they would increase their budget for combined TV and digital video buys going forward.

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Internet ad sales reach new high of $9.6 billion

Ad revenue from digital advertising in the U.S. shot up almost 16 percent in the first quarter compared with the year-ago period, according to the IAB.


(Credit: IAB)

Revenue generated by online advertising hit a new record in the U.S. last quarter.

Total first-quarter sales hit $9.6 billion, up 15.6 percent from the $8.3 billion seen in the first quarter of 2012, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. The latest numbers reflect an ongoing shift to Internet advertising on the part of marketers as revenue continues to grow by double digits.

“Consumers are turning to interactive media in droves to look for the latest information, to connect with their social networks, and simply to be entertained,” IAB CEO Randall Rothenberg said in a statement. “This first-quarter milestone clearly illustrates that marketers recognize that digital has become the go-to medium for all sorts of activities on all sorts of screens, at home, at the office, and on-the-run.”

The numbers are based on data from the IAB’s Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The report captures information directly from companies that sell digital advertising online.

The Ad-Supported Internet Added $530 Billion to U.S. Economy in 2011 – 3.7% of GDP

The ad-supported internet and the ecosystem that supports it contributed $530 billion to the U.S. economy in 2011, according to a study by Harvard Business School researchers that was commissioned by the Interactive Advertising Bureau. This total would account for 3.7% of the country’s GDP, up from 2.1% in 2007.

The study found that this ecosystem directly employed about 2 million people last year, up from about 1 million in 2007. The study also found that the ecosystem is also “indirectly” responsible for another 3.1 million jobs at companies that service the businesses at the core.

While much has been said about the lack of growth of ad-supported Internet giants like Yahoo and AOL, the study’s authors said growth is happening among small businesses.

Among the fastest growing company types were ad networks, exchanges, analytics firms and digital ad agencies, the study found. 19% of the 2 million direct jobs are the workings of sole proprietorships and small businesses involved in freelance writing, web programming, app development, and the production of crafts and products sold on websites such as Etsy, according to Leora Kornfeld, one of the researchers.

This signals “a return to cottage industry because new kind of efficiencies have been built in,” she said.

The IAB last backed a similar study in 2009, which used data from 2007. The methodology used mixes the computation of Census data with estimates of what companies pay their employees.

The full study can be downloaded at http://www.iab.net/economicvalue.

UK web advertising spend to hit £5bn

Facebook ad revenue expected to increase by 84% as mobile and online video income also soars

UK internet advertising spend is likely to reach £5bn in 2012, with Facebook on track for an estimated 84% revenue surge to £175m.

Figures from the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers reveal brands spent £4.8bn in 2011, up by £687m. The 14.4% leap marks the highest growth rate in five years.

FMCG became the second-biggest-spending sector on display ads, at just 0.2% less than financial services, which has a 15% share of the total.

Retail brands are now the third-biggest-spenders on display with a 12% share, having accounted for 10% of total display in the second half of 2010.

The UK needs to see growth of just over 4% in 2012 – pretty much a certainty given historical levels – for the market to be worth £5bn annually.

Strong growth in 2011 was partly due to an explosion in advertising on mobile devices and tablets, which rose 157% to £203m last year.

Online video advertising doubled year on year to £109m as online TV services such such as the ITV Player and Channel 4’s 4oD increased in popularity.

These two sectors have helped fuel the overall display advertising market – banners and interactive ads seen on most websites – to more than £1bn for the first time.

Display advertising grew by 13.4% to £1.13bn in 2011.

The IAB said that the display ad market has been pumped up by fast-moving consumer goods companies such as Unilever and Procter & Gamble finally latching onto the sector.

The big FMCG companies are the biggest UK advertisers on traditional media, such as TV, press and radio, but have been slow to recognise the benefits of display ads.

One of the biggest beneficiaries of the surge in display advertising is Facebook, which figures from Enders Analysis estimates doubled revenues in 2011 to just under £100m.

This unofficial estimate – Facebook does not disclose its financial performance – is expected to surge by a further 84% this year to £175m.

The stalwart of UK internet ad spend is search advertising. which is dominated by Google.

Search, which accounts for 58% of total UK digital ad spend, grew 17.5% in 2011 to £2.77bn.

The growth has come from the British public’s love of web search and the cost-effective nature of search advertising.

Newspapers Look to Targeting, Video to Boost Flagging Revenues

Will newer display formats and better targeting help digital revenues rise fasIt’s not news that newspapers are having a harder time than they once did raking in the ad dollars. After years of more dramatic declines, eMarketer estimates that US spending on print newspaper advertisements will dip another 6% in 2012 to $19.4 billion. Digital ad sales for newspapers are doing better—they are expected to increase 11.4% this year—but will still account for only $3.7 billion, meaning that gains on the online side of the ledger will not yet balance out print’s losses.

March 2012 research from the Pew Project for Excellence in Journalismsuggests that newspapers are bullish about online opportunities, however, seeing targeting and newer ad formats as important sources of incremental revenues.

More than nine in 10 US newspapers selling targeted online advertising believed that such ads would take in a greater share of digital revenue over the next year, and nearly as many respondents said the same for video ads. Most respondents, however, also reported that these two tactics represented only a minor portion of their ad sales effort—with more going toward other display and banner advertising or classifieds.

Expected Change in Digital Ad Revenue Share of Select Advertising Tactics According to US Newspapers, 2012 (% of total)

Mobile may also be a new bright spot for the print world. Between Q4 2010 and the same period in 2011, Pew reported, mobile ad revenues climbed to nine times their earlier level as a percentage of total digital revenues.

Percent of Digital Ad Revenues from Mobile According to US Newspapers, Q4 2010 & Q4 2011

eMarketer predicts continued growth in online ad spending for US newspapers (including mobile display and search ads), reaching $4.5 billion by 2016. At the same time, the decrease in revenues from print ads will continue to gradually shrink, but still outweigh digital gains. By 2016, the newspaper industry will still be losing about 1% of total ad dollars each year.

IAB: Online Ad Dollars Keep Rising, Digital video double-digit growth hitting close to 1 billion mark

Despite growing fears about the economy and the impact on ad spending in general during the past several months, online ad dollars jumped 23.2 percent to a yet another record $14.9 billion in the first half of 2011, according to figures released today by the Interactive Advertising Bureau(IAB) and PricewaterhouseCoopers (PwC US).

While online is widely expected to be growing anywhere from 16 percent to over 20 percent, there had been a good reason to expect that growth rates would start to slow a little bit this year. But those fears so far seem unfounded—at least until the end of June 2011, which was still a period of considerable hope that the economy was improving.

Furthermore, the rise is notable, if only because last year represented such a strong comeback for the ad market. The rate of growth for h12011 more than doubled year-over-year, as last year’s first-half ad revenues of $12.1 billion had represented an 11.3 percent increase over 2009.

Things were even a little better for Q2 by itself, as internet ad spending increased 24.1 percent to $7.7 billion. There was That performance compares to last year’s same-period revenues of $6.2 billion, up 13.9 percent from 2009.

The other big story this year has been the robust comeback of display ads. The latest numbers suggest that brand dollars, as opposed to cheaper direct response spending, which generally describes most internet ad placements, is gradually catching on as marketers shift their budgets from traditional at a faster rate. But that picture remains uncertain, as performance-based ads are still dominant versus ones that are intended to drive awareness.

The display category, which encompasses banner ads, rich media, digital video and sponsorships, totaled more than $5.5 billion in h12011. Some of the specific findings the IAB found during the first six months of the year:

—Display rose 27.1 percent over the same period in 2010, substantially exceeding the previous year’s growth rate of 16 percent.

—Digital video once again commanded double-digit growth — up 42.1 percent over a year ago, and moved close to the $1 billion mark with $891 million in half year 2011 revenue.

—Display accounted for 37 percent of all interactive spend in the first half of 2011.

Search is still the leading online category with a 49 percent share of the total — nearly $7.3 billion. Search and Display each grew about 27 percent year-over-year, with Search more than doubling its previous year’s growth rate of 11.6 percent.

In other online ad formats, dollars spent on lead generation grew 25.4 percent over the same period in 2010, but classified ad dollars were down 2 percent. In contrast to all the other numbers, e-mail advertising, never much of an exciting area for marketers, plummeted 34.2 percent.

Display-related advertising — which includes banner ads, rich media, digital video and sponsorships — totaled more than $5.5 billion in the first six months of 2011. Display increased 27.1 percent over the same period in 2010, substantially exceeding the previous year’s growth rate of 16 percent. Digital video once again commanded double-digit growth — up 42.1 percent over a year ago, and moved close to the $1 billion mark with $891 million in half year 2011 revenue.

Display accounted for 37 percent of all interactive spend in the first half of 2011, with search remaining the leading online category at 49 percent of the total — nearly $7.3 billion. Search and Display each grew about 27 percent year-over-year, with Search more than doubling its previous year’s growth rate of 11.6 percent.

In other online ad formats, dollars spent on lead generation increased 25.4 percent over the same period in 2010, but classified ad dollars were down 2 percent and email spend decreased 34.2 percent.

For the most part, the issue of whether display can become a true branding medium, like TV or print, the numbers made that balance seem a bit murky. Specifically, ads using performance-based models increased faster than ads using impression-based models, rising to $9.6 billion. Impression-based ad spend did grow by 10.8 percent, though that pricing model accounted for only 31 percent of total ads, down from 35 percent year-over-year.

In other words, the metrics most used in brand dollars are growing, but the share is still tilted towards ads that are tied to driving a click or some other action other than general “awareness.”

And there were some dark spots amid all the cheer. For example, Consumer Packaged Goods represented 6 percent in 2011, or $866 million, down from $980 million (8 percent) for the same period last year.

CPG, which is considered a bellwether brand advertiser, is still struggling to come up with all the metrics from the online world and fit that data into the models they’ve been using for the past 50 years, said Sherrill Mane, SVP Industry Services at IAB, during the IAB’s conference call.

“That ad category, above all others, is more resistant than other categories to using new methods of justifying marketing spending. But we’re working with those marketers to give them the proper tools.”

When asked about what the dominance of performance-based ads versus impression-based ads, which are all about how many “eyeballs” may have been exposed to the placement, Mane said it reflects the nature of the internet in comparison to other media. For example, no one expects a magazine reader or a TV viewer to immediately purchase a new phone or pair of shoes the second they see an ad; no one expects a Lowe’s to get a call about where they’re located after a TV spot.

But with online ads, there is an expectation that users will do “something” when they see an ad, simply because they can.  Mane said;

“There are abundant ways that users use interactive media.You’re beginning to see hybrid revenue models have increasing, say an ad that is both CPM-based and action-based. Independently, everyone is looking at what the IAB calls “brand performance,” which looks at other ways brands of driving engagement.”

Via IAB