eMarketer Webinar: Digital Ad Trends—What's Behind the Spending Boom

M A R C H 2 2, 2 0 1 2

Digital Ad Trends—What’s Behind the Spending Boom

David Hallerman

Principal Analyst

Sponsored by:

What we’ll look at today…

Online ad spend: growth factors

Consolidation: one form of imbalance

Ad formats: imbalance skews the picture

Video, video: cross-channel central

Social: its true place in the scheme of things

Mobile: opportunity but also imbalance

Three numbers: 23.3 and 24.1 and 15.2

Questions about why eMarketer projects ad spending growth at 23.3%

Total digital ad spending

(what’s creating the growth)

Total online ad spending makes huge gains annually, but its growth rate is slowing

Eight of 15 researchers estimate spending in 2012 at $35 billion or higher

One factor: This year’s elections will help online ad spending grow by about the same rate as last year

Key reasons for total market growth

The “more” factors. That is, more…

Time: consumer time on digital rising rapidly

Inventory: a result of more visits, sites, time

Measurable: the need to be accountable

Video: professional content to support ads

Mobile: time, usage and expectations

Brands: entry points increasing

Dollars: budget focus makes digital central

Twitter – #eMwebinar

Digital’s rising share of total media ad spending is finally starting to match media usage time

About 24% of media time is internet time, but multitasking and inattention mean not all time is a good time to advertise

Consolidation

(the game continues but players change)

Bottom line questions…

Will profits from digital ad sales…?

Turn into the big bucks?

Or turn out to be just small change?

Or slip away like a handful of water?

The top ad-selling companies are shifting places

Five companies will get more than two-thirds of digital ad revenues in 2012

Consolidation in the online ad business is not new, though—the rich grow richer, but unevenly

Reality check: Forget growth rates; instead see Google way on top and continued consolidation overall

Share of total internet ad revenues among top 10 ad-selling companies

200272%

200471%

200669%

200872%

200971%

201072%

201172%

2012??%

Source: IAB/PwC, 2002-2011

The imbalanced market can sometimes be a little crazy-making for many other ad-selling companies

Ad formats

(several imbalanced arenas)

Video ad spending will jump more than twice as much as any other format or the overall market

But by dollar share, there’s search—and then there’s everything else

Search market share among top 4 sites is probably not news

However, search growth has become a two-company competition

Is search a model for other forms of digital advertising?

The digital space mixes branding with…

…direct response marketing, which often means…

…even a single ad can dissolve the classic division between the two

Display advertising

(a diverse market)

Display dollars in 2015 will increase by more than half from 2012—but growth rate will decline from 24.1% to 10.8%

Video share up, banner share down, sponsorship a potentially profitable niche

Significant disparity of display revenue growth at top 5 companies

However, display spending is less consolidated than the total market

Impressions match money: The not-top-5 get about half of display impressions

Weighing the imbalances in digital ad spending helps focus budget choices

Display growth without social and mobile paints a different picture

Three more ways of parsing the current display market

The video focus

(cross-channel possibilities)

Even as online video advertising growth rates slow,spendingwill double in only two years

Display’s overall market growth at 24.1% is due mainly to video’s strength…

…where about half or more of marketers expect to increase spending in 2012

Key indicators: Comparing growth vs. dollars shows mobile video gaining more but more money goes on the desktop

As seen on the web? (Nah!) TV’s power is still unmatched for many goals

In a typical week, US consumers watch video mainly on TV, however…

TV forever? Containers may change, but the content basically remains the same

Social and mobile

(beyond the hype)

Social sites will see greater ad growth in 2012 than the overall market —43% vs. 23% (but social is much more than just advertising)

More marketers plan display spending increases on social media than, say, on content publisher sites

Facebook is the social ad revenue leader, but other social sites are slowly gaining on it

The social space is large and getting larger — does that mean it’s due for shakeout?

Mobile ad spending will rise from $1.45 billion last year to $2.61 billion this year, driven by everything but text messaging

About half of mobile spending went to Google — far more than even Apple

The mobile market is mainly search, with a large slice slice of banners and rich media

And mobile search is mainly Google (another huge cluster)

Mobile display: one more market that’s concentrated, but a bit less so

Getting your share of the mobile market often means playing with the big dogs

Conclusions

The 23.3% projection for 2012 is for the overall market.

But the overall market is imbalanced.

Some of the imbalanced elements: search nearly 50% of whole, and growing at 27% video growth at 55%, but makes up only 8% of total five companies will get nearly 67% of ad revenues social dominated by Facebook, with 70% of category ad dollars mobile display dominated by three networks (60%), and mobile

search is nearly all Google (95%)

Display online, and video in particular, offer more opportunities for lessening the imbalance than does search, social or mobile.

But note how display growth (sans social and mobile) at 15.2% more accurately represents the mainstream online ad market.

Conclusions:Ad spending growth is uneven, but…

Consumers Reward Brand Transparency

Lack Favorability Towards OBA Concept

Impact of Transparency on Perceptions of Online

Advertising

I would be inclined to do more business with ad advertiser or publisher who gives me the option to opt-out of OBA

I would be more inclined to click on an advertisement that gives me the option to opt-out of OBA

BASE: Total Qualified Respondents (n=1004)Q75 Please indicate the degree to which you agree or disagree with each of the following statements related to online advertising .

55%51%

Do not like

Neutral

Addressing Consumer Concerns with DAA-Compliant Self Regulation

Advertising Preferences IconSelf-Regulatory Program For Behavioral Advertising

The Digital Advertising Alliance (DAA)

Substantial growth: 400+ companies comply

900 billion compliant impressions per month

All top-15 global advertisers participate, including: American Express, AT&T, Disney, General Motors, Kraft Foods, Microsoft and Walmart

Feb, 2012: The DAA announced that it will immediately begin work to add support for browser based DNT header signals. Planning to integrate by end of year.

DAA – AdChoices Program Growth and News

DAA Evolution

A simple ad tag inserts the DAA icon

How Does DAA Compliance Work?

Advertising User Experience

If clicked the icon launches privacy notice inside the ad

2. Consumers have option to click to Preference Manager and opt out of selected tracking networks

Consumer favorability increases 50% with “Powered By TRUSTe” DAA Compliance

BASE: Total Qualified RespondentsQ935/Q950 And, how does having this information available make you feel about the advertiser?

Impact onFeelings Towards

the Advertiser

About TRUSTe

Leader in Privacy Management Solutions 14 years of privacy experience Robust technology platform #1 privacy brand & trustmark

Comprehensive Solution Suite All media and devices Global coverage Self- and full-service options

Leading Provider to Leading Brands Over 5,000 clients Leading DAA AdChoices Icon Provider Over 100 Billion DAA Compliant Ads Served

Q&A Session

Digital Ad Trends—What’s Behind the

Spending Boom

eMarketer Webinar: Digital Ad Trends—What's Behind the Spending Boom

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