Sunday, 19 June 2011

Future Display Advertising

Neal Mohan, Google’s Vice President of Display Advertising, predicts a brilliant future for display advertising. By 2015 engagement, co-creation and über-personalized display ads will cause growth in the display advertising market.
I believe all that. I seriously doubt, though, that 40% of online (US) users will name display advertising as their favourite advertising format. This was the outcome of a survey done among 1000 US Internet users.

21.3% growth
My doubts, however, seem to be out of place. The Internet Advertising Bureau Europe (iabeurope) also mentions a ‘bounce back’ of Display Advertising throughout Europe (including Russia) with an average growth rate of 21.3%, Display overtaking Search advertising as the fastest growing online ad format in Europe.

Display and Search ads
The outcome of IAB Europe’s annual AdEx survey is fascinating. It shows the online advertising market accelerating at a growth rate of 15.3% in 2010 - outperforming the overall European advertising markets, which grew 5.0% in the same period. Total online adspend was €17.7bn in 2010, compared to €15.3bn in 2009.

Market growth ranged from:
37% in Russia;
24% in the Czech Republic;
14% in Denmark;
7% in France.

The markets with the highest online adspend in the report are:

Together they account for almost three quarters (74%) of the total European online advertising market. Central and Eastern Europe (CEE) markets now represent almost a tenth (9.8%) of the total.

Russia, Ireland, Spain
Display* advertising enjoyed growth rates of 20% or more in many markets - both emerging and mature - during 2010.  Above average growth rates were experienced in Ireland (31%), Spain (30%) and Russia (27%).

Rich Media
The continued growth of online TV inventory, and long-form video consumption, pushed up spend while simultaneously maintaining high CPM (cost per thousand). Online video adspend has doubled in most markets. In Spain online video grew 125% to a value of €13m; growth in the UK was 90%, to a market value of €63m.

Super Search
Paid search continued to grow double-digit at an average of 15.1%. It remains the biggest category in online advertising, with 45% of total advertising spend compared with 33% for Display and 22% for Classifieds and Directories. Whilst some of the more established markets experienced smaller increases (UK +8%, France +10%) many saw explosive growth (Hungary +44%, Poland +31%).

Mobile Advertising
Mobile search and mobile display are included in the AdEx survey for the first time this year. I presume that is in 2010. Although mobile adspend figures are available for only 12 of the 25 markets, they confirm that the long-awaited take-off of mobile advertising has been realised thanks to the advent of the smartphone/3G/apps ecosystem. In those markets, mobile adspend already accounts for 2% to 3% of total online adspend.

17 Billion Eures!
With €17.7bn of adspend last year, online now accounts for 18% of the entire European advertising market. It is now beyond 20% in some markets (UK 29%, Denmark 28%) whilst it’s only 5% in Greece and 4% in Romania. European market value is smaller than the US which also experienced a 15% growth rate last year and is now worth $26bn/€19.6bn.

2009: flat Display market
According to Vincent Létang, Senior Analyst at IHS Screen Digest says “Back in 2009, video was the only growth engine in an otherwise flat Display market. In 2010 by contrast, three pillars: mobile, video, social media, attracted new advertising investment.

Display advertising by 2015
Now, superimpose Mohan’s six predictions about how display advertising will change for the better by 2015 and imagine what will happen on the European market:

  • The number of display ad impressions will decrease by 25 percent per person. Today, people are bombarded by online ads, but they don’t connect with most of   these ads in a meaningful way. I believe the trend will be for people to ultimately see fewer, but better ads.
  • Engagement rates across all display ads will increase by 50 percent. As ads become less cluttered, more relevant, more engaging and more attractive, we’ll see the rate at which people interact with display ads (such as watching videos or playing games) increase dramatically.
  • People will have a direct say in 25 percent of the ads they see. Whether by choosing to watch—or not watch—video ads, updating their ads preferences to customize the ads they see or actively subscribing to or choosing to receive particular ads, users will be more in control of when and how they see ads online.
  • 35 % of campaigns will primarily use metrics beyond clicks and conversions. Technology is helping marketers measure their ads with new tools that look at factors like emotional engagement and impact on offline behavior (like in-store shopping choices). We see a longer-term future where these become the primary metrics used to measure the success of a campaign, meaning marketers will be able to deliver the ads that potential customers say they like the most.
  •  25 billion ads per day will tell people why they are seeing them. We believe it’s important to give people as much information as possible about why they see particular ads. That’s why we’ve always included an “Ads by Google” notice, and now the AdChoices logo, on ads across the Google Display Network. We strongly support the widespread use of this logo by members of the display industry and by 2015, believe that this sort of notice will become ubiquitous.
  • Over 40 percent of online Americans will name display ads as their favorite ad format. We recently conducted a survey with YouGov of more than 1,000 U.S. Internet users, asking them what ad formats they liked. The number of people who said they preferred display ads trailed slightly behind the number who liked glossy magazine ads, cinema ads and even sky-writing—formats that have been around for more than 50 years! We think this will change. Display ads provide an incredible platform to engage, excite and inspire. If we as marketers, publishers and technology providers can deliver experiences that delight the user, we can take this industry to new heights.

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