trends in digital advertising - us

TRENDS IN DIGITAL ADVERTISING - US

June 2014

Market Trends & Growth Statistics

Digital Ad Spending by Industry

Technology Drivers

Challenges in Digital Advertising

Market Trends & Growth Statistics

• Digital ad spend is set to rise to nearly one-third of the total media ad spend by 2018

• Advertisers are set to invest $204.01 billion by 2018 in digital

Digital Ad Spending Worldwide 2013-2018

Source - eMarketer

• Western Europe accounts for nearly 25% of all digital spending around the world, and other regions make up just a small share

Digital Ad Spending Share, By Region

• Of the total media ad spend across the world, 25% will be spent on digital ads

• The US is still the single biggest spender on digital ads, with nearly 40% of total digital ad dollars this year compared with 28.6% in Asia-Pacific

(In billions & % of total media spending)

(Share for 2014; % of Total)

• U.S. digital advertising revenues for 2013 hit an all-time high of $42.8 billion

• This momentous figure marks an increase of 17% from 2012’s landmark revenues of $36.6 billion

Source – IAB/PWC Internet Ad Revenue Report, 2013

Advertising Revenue Market Share, By Media – 2013 (In $ billions)

Ad Formats 2012 - $36.6 Bn Ad Formats 2013 - $42.8 Bn

• For the third year in a row, mobile achieved triple-digit growth y-o-y, rising to $7.1 billion during 2013, a 110% boost from 2012 and accounted for 17% of 2013 revenues

• Digital video, a component of display-related advertising, brought in $2.8 billion in 2013, up 19% from 2012 to increase its share to become the fourth largest format, behind mobile

• Market share of search and display is down by 2-3 percentage points


Digital Ad Spending by Industry

Digital Ad Spend by Industry, 2012 vs. 2013

• Retail advertisers continue to represent the largest category of digital ad spending, responsible for 21% in 2013

• Financial services comes second with 13% of digital ad spending, closely trailed by Automotive which accounts for 12%

• Digital ad spending contracted in telecom, travel, computing and healthcare


The US Retail industry’s advertising spending on paid digital media will reach $11.05 billion in 2014 and rise to $17.39 billion by 2018, with a 12.8% CAGR

Digital Ad Spend by Channel, 2014 (In $ Billion)

Total Retail Ad Spend $11.05 Bn

Digital Ad Spend by Objective, 2014 (In $ Billion)

US retail digital ad spending shows a stronger emphasis on ads meant to trigger sales and leads than those intended to boost brand awareness

Source - eMarketer

Shopping has become a cross-device activity, and advertisers are investing in ways to reach mobile users across all steps in the path to purchase, resulting in increased mobile spend

Advertising spending in paid digital media by the US Financial Services industry will hit $6.20 billion in 2014 and rise to $9.57 billion by 2018, with a CAGR of 12.5%


Total FS* Ad Spend $6.20 Bn


The financial services industry continues to primarily leverage digital advertising to support direct-response

Source - eMarketer

Mobile advertising is increasing, driven by broader market trends as well as a concerted push by institutions to get consumers to use mobile financial services

* Note: FS – Financial Services

Advertising spending in paid digital media by the US Automotive industry will cross $6.15 billion in 2014 and rise to $10.36 billion by 2018, with a CAGR of 14.9%


Total Auto Ad Spend $6.15 Bn


Automotive industry digital strategy is towards direct response to win sales in the final weeks of the shopping process using tactics like search & programmatic, targeted ads

Source - eMarketer

Mobile-based branding and upper-funnel advertising efforts are increasing in response to evolving consumer research behavior which has shifted to mobile

Advertising spending in paid digital media by the US M&E* industry will cross $5.15 billion in 2014 and rise to $8.54 billion by 2018, with a CAGR of 15.1%

Entertainment Digital Ad Spend by Objective, 2014 (In $ Billion)

Media Digital Ad Spend by Objective, 2014 (In $ Billion)

Media companies lean toward lower-funnel objectives such as getting customers to subscribe and drive traffic to digital content

Source - eMarketer

Entertainment companies heavily use video, social and branded/custom programming approaches, which tend to aim for upper-funnel objectives such as driving awareness

* Note: M&E – Media & Entertainment

Total Media Ad Spend - $2.80

Total Entertainment Ad Spend - $2.35

Total M&E Ad Spend $5.15 Bn

Advertising spending in paid digital media by the US CPG* industry will cross $4.20 billion in 2014 and rise to $7.04 billion by 2018, with a CAGR of 14.7%


Total CPG* Ad Spend $4.20 Bn


The breakdown has shifted even more in branding’s favor as brand building is among the categories for which CPG CMOs in the US are expected to increase their marketing

Source - eMarketer

Mobile is another area where brands are upping ad spending as they follow consumers who are spending increasing amounts of time on their smartphones

* Note: CPG – Consumer Packaged Goods

Advertising spending in paid digital media by the US Travel industry will cross $4.15 billion in 2014 and rise to $6.40 billion by 2018, with a CAGR of 13.4%


Total Travel Ad Spend $4.15 Bn


OTA’s focus on direct-response tactics will drive trends for the industry as a whole. The emphasis on direct response is a function of advertiser familiarity & effectiveness of format

Source - eMarketer

Travel marketers make changes to deal with high mobile device usage. Because of the relative newness of mobile, marketers will experiment with a variety of mobile ad units

Technology Drivers

Spending on digital video advertising is set to reach $6 billion in 2014

(In $ Billion)

$4.20

$5.96

$7.77

$9.45

$11.11

$12.71

Source – eMarketer, DigitalSherpa

Everyday 100 Million Internet Users watch an online

video

In a month, the internet user is exposed to an average of

32.2 Videos and spends around 16 Minutes 49 Seconds watching online video ads

Reach of Online Video

Effectiveness of Online Video

80% of internet users remember the video ads they watch

online

75% of users visit the marketer’s website after viewing a

video Videos increase people’s understanding of a product or

service by 74%

Website visitors are 64% more likely to buy a product on an

online retail site after watching a video

Digital Video is now the fourth-largest Internet ad category with a 7% share & estimated to reach 15.5% in 2018

Display $3.38 BN

Search $3.95 BN

Messaging $216 MN

Video $518 MN

Other $100 MN

Revenue estimates for mobile ad formats

Source – IAB / eMarketer

Estimated 75% increase from 2012

$7.65 Billion

Projected Mobile Ad Spending in 2013

The largest social platforms in the world monetize with native, in-feed ads, including Facebook,

Twitter, Pinterest, Instagram, and Tumblr

The publishing industry is quickly following suit, as companies - Time Inc, Forbes, Wall Street Journal,

New York Times & USA Today are introducing native advertising

25% more consumers were measured to look at in-feed, native ad placements more than standard banners

People See Them

Consumers looked at native ads 2% more than editorial content and spent the same number of seconds viewing

Viewed as Editorial

97% of mobile media buyers report that native ads were very or quite effective at achieving branding goals

Mobile Branding

Native ads registered 18% higher lift in purchase intent than banner ads

Purchase Drivers

US Display Ad Spending Share, By Type

• Programmatic ad buying will continue to constitute an ever-larger slice of display-related ad buying in the US

• RTB ad buying will make up the largest share of programmatic buying

Source - eMarketer

American Express plans to shift 100% of its online ad budget to programmatic channels

Mondelez and TubeMogul strike programmatic video advertising partnership

Procter & Gamble wants to buy 70% to 75% of its U.S. digital media programmatically by 2014

Buzz on Programmatic

Challenges in Digital Advertising

• Consumers concerned about Online Data Privacy

• Platforms for mobile/online advertising and the devices themselves are disparate and ever changing

• Online Ad Fraud scams that flood sites with bot traffic

• Ad Viewability

• Relevant Measurement Metrics

Ads are buried low on web

pages

Ad platform Vindico found 57% of digital video ads were not viewable. ComScore estimates that 54% of all digital ads are never seen.

Ads run in tiny, easily ignored video players

Ads run simultaneously with other ads

Ads not being seen by a human

being

American brands are now spending more than $1 billion a year on marketing that few if any people see

$3 bn a year spent on online video ads

57% of them are deemed unviewable

Source: NYTimes Article – The Great Unwatched

Transparency of video ads served

Whitelist of sites

Avoid below the fold inventory

Completion rate as core metric

Mobile video advertising

Cost per view digital buying

Solutions to ensure

Viewability

Compiled By – Arjun Vazirani Date – June 2014

Email – [email protected] Twitter - https://twitter.com/arjunvazirani LinkedIn - in.linkedin.com/in/arjunvazirani

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