Why Digital Ad Spend Is on the Rise

by Mark Smith Advertising

Digital advertising is not only growing, it’s becoming more mainstream. As noted in two recently published research reports, internet advertising spending is hitting record highs and is projected to soon exceed 50 percent of all advertising spend for the first time. Let’s unpack what this information means for your business.

Trends in Growth Reflect Value

According to a report issued by the Interactive Advertising Bureau (IAB) on August 6, “U.S. digital advertising revenues reached a landmark high of $28.4 billion in the first quarter of 2019. This is the industry’s strongest Q1 on record.” The 18 percent rise over Q1 2018 digital revenues are part of a trend, as David Silverman, Partner, PwC US, sees it: “These historic Q1 figures are in keeping with digital’s ongoing rise,” he notes. The leaps in growth are also telling, reflecting the value digital ad spend can yield. Sue Hogan, IAB’s Senior Vice President, Research and Measurement, says that “[t]he continued growth of digital ad spend is a reflection of its ability to help brands and publishers reach consumers and build meaningful one-to-one relationships.”

The Balance Is Tipping

Digital advertising isn’t just strong and growing, it’s also overtaking offline advertising. In a report released July 8 by Zenith, internet advertising is predicted to account for 52 percent of global advertising expenditure in 2021. This development would mark the first time digital advertising exceeded the 50 percent mark of all ad expenditures, overtaking analog advertising formats such as linear television, billboards, and print. According to Zenith, print in particular is on the decline, and traditional television ad revenues can be expected to dwindle every year from now to 2021.

Brands should note that internet advertising isn’t a monolithic spend. Ongoing technological improvements to smartphone technology and connection speeds, paired with strong content investment, have informed the growth of ad spend in online video and social media, in particular.

What Does It All Mean?

The reports suggest a few takeaways, including:

Digital ad spending is finally becoming mainstream. It’s no longer part of a company’s advertising, it’s central to a company’s strategy.

Businesses are getting more sophisticated about how they advertise. They are increasing and decreasing their digital spend in different types of digital advertising to suit the specific needs of a campaign, and to adapt to changes in consumer behavior. The fact that advertisers are upping their spend in video and social media reflects an understanding of the surge in consumer social media usage and, as we’ve noted on our blog, the demonstrated appetite for visual content.

What You Should Do

Taken together, these reports underline how important it is that advertisers constantly assess and respond to consumer behavior. By staying current, savvy advertisers can be leaders, not followers—and reap the benefits of being an informed early adopter. For example, businesses that reacted early to the rise of visual storytelling already have a leg up on those that waited too long. You want to be one of those businesses that monitor how consumers are acting and adjust advertising strategies accordingly — before your competitors do.

A really good example of a trend to watch? Voice search. Per Zenith, “A lot of innovation in search is taking place in voice, which is currently not monetised.” Voice-based advertising may not be paying off yet across the board—but it’s only a matter of time before it does. Smart brands will keep an eye on voice search and take action before it’s mainstream.

Contact True Interactive

How are you sensing and responding? Contact us. We can help you maximize ROI of your online advertising.

Digital Video Advertising Outshines TV

by Tim Colucci Video

Digital video is hotter than ever for brands. According to the Interactive Advertising Bureau Video Ad Spending Study, advertisers are spending on average more than $9 million annually on digital video advertising (a 67-percent increase from two years ago), and video represents more than 50 percent of their digital/mobile ad spending.

The IAB report is based on a survey of brands and agencies across a wide spectrum of industries ranging from automotive to telecom. Most of the respondents plan to invest more into both digital and mobile video over the next 12 months. Many will fund their investments into video by reallocating their television budgets, and most respondents believe that original digital video content reaches an audience that TV cannot reach. They also prefer video because of the quality of the environment and overall effectiveness of reaching an audience.

These findings don’t surprise me. My own client experiences suggest that advertisers are also drawn to the measurability and audience segmentation possible with digital video compared to TV advertising. As I wrote on the True Interactive blog, not only can you target customer segments with online video, but you can see how many of them interacted with your site, subscribed to your YouTube channel, made a purchase, or watched another of your YouTube videos (other than the ad you just showed them). Not only can advertisers see the different interactions of an audience, but they can also see how much of the video ad that they watched.

To maximize the value of online video, I suggest that advertisers:

Develop an interactive video strategy tied to your branding goals and aligned with the behavior of your customers. Map out your customers’ journeys throughout the digital world and figure out how interactive video will best move your customers from the awareness to consideration to purchase and retention. In the healthcare profession, for instance, medical providers use interactive video to educate potential patients on topics such as wellness care, which raises awareness for providers when customers are researching topics such as proper dieting or exercising.

Understand the nuances of using video — both paid and organic — across different platforms. “Video” can mean many things to different brands, ranging from a bumper ad on YouTube to a Facebook Livestream. According to a recently released report from think tank L2, video formats provide different advantages depending on what platform you use. Instagram content provides higher levels of engagement compared to other platforms, Facebook provides incredible reach, and YouTube is better for longer-form video content that lends itself to episodic storytelling.

In addition, it’s important to stay on top of this fast-changing format. The different platforms are constantly introducing new features as they attempt to gain an advantage on each other, and advertisers that stay in the know will seize a first-mover advantage. On the True Interactive blog, we regularly discuss how to succeed with video (as shown by this example about livestreaming). Other useful resources include the blogs from platforms such as YouTube and third-party content from institutes such as the IAB. How are you capitalizing on interactive video?

Image source: Marketing Land

Mobile Advertising: Let Your Customer Be Your Guide

by Kurt Anagnostopoulos Mobile

Mobile is a shining star of performance marketing. According to the Interactive Advertising Bureau (IAB), for the first time, mobile ads account for the majority of digital ad spend. The IAB 2016 Internet Advertising Revenue report says that mobile ad revenues increased 77 percent to $36.6 billion in 2016, or 51 percent of total digital ad spend. Desktop search, the next biggest category, accounted for 24 percent of the total.

The IAB also says that the $36.6 billion spent on mobile ads included $17.2 billion for mobile search and $18.1 billion for mobile display.

I’m not surprised by the growth in mobile ad revenue. The ad spend reflects changing consumer behavior and the power of major publishers such as Google. The number of mobile searches on Google surpassed desktop searches two years ago. And Google has been changing its algorithms to force brands to respect the power of mobile. For instance, Google’s 2015 “mobilegeddon” algorithm rewarded mobile-friendly web pages with higher rankings for searches done on Google.

And yet, as important as mobile has become, mobile is still a contextual experience. To me, the real excitement and long-lasting value for advertisers comes from creating meaningful online advertising that appeals to omnichannel consumers.

Omnichannel consumers interact with brands through a variety of devices and channels, including social media, your website, display ads on other sites, and search results – on mobile phones, desktops, tablets, in games, on television, and through voice-activated assistants, to cite just a few of the proliferating channels and devices that shape the consumer-brand experience.

You get a better picture of how complex the advertising landscape really is when you dig into the IAB report and sift through the variety of ad formats that account for digital spend. (The report’s appendix alone, which details the pricing models and ad formats, is instructive.)

It’s important that businesses understand the nuances of advertising through different channels and devices. For instance, Tim Colucci at True Interactive has been blogging lately about the distinct challenges and opportunities of video advertising. (Here is an example.) At the same time, I believe it’s more important to coordinate mobile in context of the understanding your consumers’ journeys from awareness to purchase to loyalty. Yes, mobile advertising is probably going to be important to just about any brand, but how and when you spend on mobile advertising may differ dramatically by channel (e.g., Facebook, Snapchat, Instagram) and device depending factors such as what stage a customer is in the buying decision and the time of day they’re interacting with your brand.

So let’s celebrate and appreciate the rise of mobile ad spending. But even more importantly, let’s keep our focus on the broader consumer journey and invest into experiences that create and retain customer relationships throughout the journey, one impression, channel, and device at a time.

Image source: Startup Stock Photos

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