U.S. ad-spending to see largest increase since 2004 [report]

Mobile Advertising
Mobile advertising leads growth; will surpass radio, magazines, and newspapers this year.

Total media ad spending in the US this year will see its largest increase in a decade, according to eMarketer. Total ad investments will jump 5.3% to reach $180.12 billion, achieving 5% growth for the first time since 2004, when ad spending increased 6.7%.

US total media ad spend 2012-2018

Mobile will lead this year’s rise in total media ad spending in the US, and advertisers will spend 83.0% more on tablets and smartphones than they did in 2013—an increase of $8.04 billion. By the end of this year, mobile will represent nearly 10% of all media ad spending, surpassing newspapers, magazines and radio for the first time to become the third-largest individual advertising venue, only trailing TV and desktops/laptops. Though investments in TV advertising will rise just 3.3%, advertisers will spend $2.19 billion more on the medium than they did in 2013, making it the second-leading category in terms of year-over-year dollar growth.

Digital ad spending by channel

The surge in mobile advertising is chiefly attributable to the fact that consumers are spending more and more time with their tablets and smartphones. According to the latest estimates, US adults will spend an average of 2 hours 51 minutes per day with mobile devices this year. In 2013, daily time spent on mobile devices and on desktops and laptops was equal, totaling 2 hours 19 minutes, but this year, time with desktops and laptops will drop slightly to 2 hours 12 minutes, while mobile time will increase significantly. TV remains by far the largest beneficiary of adults’ media time, at 4 hours 28 minutes in 2014, hence its persistent lead as the top category for advertising spending.

Net digital ad revenue share

Strong, steady growth in mobile advertising will push digital ads to represent nearly 30% of all US ad spending this year. Advertisers will invest more than $50 billion in digital channels in 2014 for the first time, an increase of 17.7% over 2013. Just over one-third of that will come from mobile, but by 2018, mobile will account for more than 70% of digital ad spending.

Digital ad revenue

The accelerated rise in ad spending is being influenced in part by growing revenues from leading internet media companies, particularly those that are capitalizing on mobile revenues. eMarketer projects advertising revenues for a handful of the top US digital ad-selling companies, which collectively will represent 18.2% of total media ad spending this year—led by Google and Facebook. Google alone already accounts for more than 10% of all advertising spending in the US, and in 2016, together Google and Facebook will take a 15.0% share of the $200.00 billion total media advertising market. Mobile ads on Facebook will total 68.0% of its US ad revenues this year, up from 46.7% last year, and while Google’s ad revenues in the US won’t flip to majority-mobile until 2016, they’re shifting quickly. This year, Google’s US mobile revenues will comprise only 36.8% of its overall ad revenues, but by 2016, the medium will account for 65.8%.

These forecasts are based on a multi-pronged approach that focuses on both worldwide and local trends in the economy, technology and population, along with company, product, country, and demographic pecific trends, and trends in specific consumer behaviors. Quantitative and qualitative data is analyzed from a variety of research firms, government agencies, media outlets and company reports, weighting each piece of information based on methodology and soundness.

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US Ad Spending Trends

ad spendingKantar Media has released its latest quarterly report on US advertising spend, finding that total expenditures in Q1 grew by 5.7% year-over-year to $34.9 billion, boosted by the Winter Olympics, which added an incremental $600 million in spending. Network TV was a prime beneficiary, with roughly half of its 14.5% year-over-year growth owing to the Winter Olympics. Beyond TV’s healthy growth, other trends remained largely consistent with prior quarters.

Ad spending trends

Kantar Media figures may actually underestimate growth, as the online spending estimates only include display advertising, which the report says increased by 13% for the quarter. (By comparison, the IAB recently reported that online ad spending in the US grew by 19% in Q1.)

Trends:

  • TV

TV media spending was buoyed by the 14.5% increase in network spending, which also benefited from more spending on the NFL playoffs and the Super Bowl. a 7% rise in spot TV expenditures, and an 18% hike in Spanish-language TV spend. Indeed, each measured type of TV saw a rise in expenditures, including spot TV (+7%), Spanish-language TV (+18%), cable TV (+6.2%) and syndication TV (+3.2%).

TV media expenditures grew by 9.5% year-over-year in Q1.

  • Radio

While the Radio Advertising Bureau (RAB) pegged radio revenues as being flat in Q1, Kantar’s estimates aren’t as kind, seeing a 2.4% decline from Q1 2013. Network radio was down by 5.4% per Kantar (-8% according to the RAB), national spot radio grew 6.7% (-2% per the RAB). Local radio (-4.7%) and Hispanic local radio (-10.8%) both saw decreases, according to Kantar’s calculations. Those decreases were primarily attributed to a decline in spend by the retail, auto dealer and restaurant categories.

  • Print

After mixed results in 2013, print ad spending started the year off on the wrong foot, with magazine ad spend down 1.6% and newspaper spend down 5%. (See here for more on global newspaper ad spending trends.)

Within magazine media, declines in ad spending for consumer magazines (-2%) and Sunday magazines (-5.6%) were not matched by increases in spending on B2B magazines (1.2%), local magazines (4.4%) and Spanish-language magazines (15.8%). Kantar notes that the decrease in consumer magazine ad spend owed to “severe reductions from the two largest magazine advertisers (Procter & Gamble and L’Oreal) who account for more than ten percent of total spending.”

Within newspaper media, national newspaper ad spending was flat, while Spanish-language newspaper expenditures inched up by 0.2%. Local newspapers were the only to experience a decline, by a substantial 5.8%.

  • Outdoor, FSIs, and Display

Outdoor advertising had another quarter of positive growth. Outdoor advertising finished the quarter with 2.6% year-over-year growth (the OAAA recently estimated the increase to be 1%). Spending on free-standing inserts (which represents distribution costs only) continued its solid growth, up by 4.4% during the quarter.

Display ad spend increased by 13% in Q1 on the back of larger investments by financial, retail and insurance marketers advertisers.

Top Advertisers and Verticals

Eight of the top 10 advertisers in Q1 increased their spending on a year-over-year basis, with some doing so by a considerable amount. GM hiked its spending by 55.8% year-over-year to $593.4 million, in so doing becoming the second-biggest spender of the quarter, behind Procter & Gamble (-2.6% to $773.8 million). AT&T was the third-largest advertiser (up 4.9% to $535.5 million), followed by Comcast (+5.4% to $421.9 million) and Verizon (up 24.8% to $370.8 million).

Overall, the top 10 advertisers increased their expenditures by 14.1% year-over-year during Q1.

Automotive ranked as the top advertising vertical with roughly $3.76 billion in spending, up 7.7% year-over-year. Retail was next, with a modest 1.6% increase in spending bringing in to $3.41 billion in expenditures. Telecom (up 3.8% to $2.4 billion), local services (up 7.1% to $2.36 billion), and financial services (up 4.2% to $1.98 billion) rounded out the top 5.

About the Data: Kantar’s full explanation of its methodology can be found at the link above.

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Personalized Ads More Engaging and Memorable [study]

Personalized Ads
Compared to general ads, many consumers find personalized ads to be more engaging (54%), educational (52%), time-saving (49%) and memorable (45%), according to a Yahoo survey of 6,000 respondents aged 13-64. The study also found personalized ads to outperform those that aren’t personalized across a series of measures, with respondents also generally perceiving them to be relevant than non-personalized ads.

Personalized Ads More Engaging

Personalized ads’ greater perceived relevance is important given a growing body of research indicating that consumers develop unfavorable attitudes in response to poorly targeted or irrelevant marketing messages. In fact, the Yahoo research found that few consumers find ads to be relevant: just 37% indicated that most of the ads they see while browsing the internet on their PC/laptop are relevant to them, and even fewer concurred with respect to the ads they see while browsing the internet on their smartphones (30%) or while in apps on their phones (27%).

Personalization carries with it questions of privacy, but roughly two-thirds of respondents said they either find it acceptable or are neutral about publishers gather the following types of information for advertising:

  • Specific content they’ve looked at;
  • Time spent;
  • Search words;
  • Ads they’ve clicked on; and
  • Products they’ve browsed.

The degree to which consumers welcomed advertising personalization varied by category, with 77% desiring personalized retail ads, but only about one-third feeling the same way for car or entertainment options.

Such discrepancies were also true for content personalization: while 60% felt that personalization technology would improve entertainment content, only 41% felt that way about finance content. Nevertheless, some 78% of respondents desire some type of content personalization.

About the Data: Yahoo partnered with Ipsos MediaCT to survey 6,000 respondents ages 13-64, a representative sample of the US online population, about online content and ad personalization.

How are you personalizing your advertising campaigns?

IAB Releases In-Image Ad Primer

Image-based advertising, also known as in-image advertising, is paving the way for the next generation of digital display advertising. This “In-Image Advertising Primer,” offers a comprehensive overview of this burgeoning ad type, often leveraged in native advertising campaigns. In-image ads can take several forms, ranging from display ads and product information overlaid on photos to video or rich media ad units that only appear when the user engages by hovering or clicking on the ad.

The primer examines power of pictures to attract the reader’s eye and draw attention to marketing messages, while detailing how this form of native advertising enables publishers to monetize valuable real estate – images which are in-stream, which have a high probability of being viewed by consumers.

With the format in its early stages of development and marketplace acceptance, the paper illustrates in-image advertising’s effectiveness through five case studies with major brand advertisers including Activision, Cat’s Pride, Garnier, Mazda and the Northwest Dealer Group (NDG).  In-image campaigns focused on driving brand lift for awareness generate an average rise of 37 percent on that front – almost three times the industry average for awareness campaigns, according to Nielsen Online Brand Effect norms.

In-Image Advertising Inserts Relevant Ad Over Images Across the Web
Source IAB

IAD In-Image Ad Primer

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Social Ads Prove Highly Effective in Delivering New Audiences [study]

social-media-ads
Social was a better bet than portals, networks, and exchanges last year for reaching users that can be consistently marketed to (“user quality index”), according to the latest quarterly “Global Media Intelligence Report” from Neustar Aggregate Knowledge. The study reveals that social ads performed 52% better than the 4-channel average in delivering such quality users during Q4. In fact, social ads performed better than the average during each quarter of the year.

social-ads
Social also emerged as the best option for reaching exclusive users at the lowest cost throughout the year. On the measure of “reach efficiency,” social ads scored an impressive 129% higher than the average during Q4; as it did with the “user quality index,” social ended up as the only channel to outperform the average for “reach efficiency” during each quarter of the year.

During Q4, exchanges emerged as the most cost-effective channel (cost in relation to driving impressions, clicks, and conversions – measured by CPM, CPC, and CPA), with an index of -250, compared to indices of -150 for networks, 50 for social, and 350 for portals, the most expensive option.

The study also demonstrates that a pure last-touch attribution model underestimates the value of social. When using a multi-touch attribution model instead of a last-click model, the results indicate that social saw its value increase during each quarter of the year. That owes to social exerting more influence in the upper funnel.

About the Data: The data analyzed in the report covered approximately 145 billion ad events, 61 billion impressions, and 10.5 million conversions.

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What Types of Ads Are People Ignoring?

Advertising
A new survey from Goo Technologies, conducted by Harris Interactive, looks at the types of ads that consumers say they are most likely to ignore. Overall, the study finds that online ads are ignored by the largest share of respondents (82%), with traditional media ads such as TV ads (37%), radio ads (36%), and newspaper ads (35%) a fair way behind. Drilling down into the results, some interesting demographic differences emerge.

Who is Ignoring Which Ads?Looking first at online ads, the survey indicates that banner ads are ignored by the largest share of respondents overall (73%), followed by social media ads (62%) and search engine ads (59%). In each case the propensity to ignore ads rises alongside age – by a significant degree. Here are some interesting breakdowns:

Compared to 18-34-year-olds, the 65+ crowd is:

  • 50% more likely to count online banner ads among those they ignore the most (87% vs. 58%);
  • 58% more likely to ignore social media ads (76% vs. 48%); and
  • 53% more likely to ignore search engine ads (72% vs. 47%).

Interestingly, older respondents are ignoring more banner ads despite seeing less of them: a recent study from comScore determined that during November 2013, 18-34-year-olds saw on average 2,311 display ads, compared to 2,212 for 35-54-year-olds and 1,803 for those aged 55 and up. With those types of numbers, it’s really not surprising that 3 in 4 respondents to the Goo Technologies survey are ignoring banner ads the most – they’re seeing about 70 per day!

How about TV ads? In this case, older Americans watch significantly more TV than their younger counterparts (and presumably therefore see more ads). Consistent with the results above, the oldest group reports being almost twice as likely to be ignoring TV ads as the youngest group (50% vs. 26%). That’s an interesting stat worth repeating: young Americans are about half as likely as older Americans to say that TV ads are among the ones they ignore the most. (They’re slightly more likely to be skipping recorded TV ads, though, according to the comScore study referenced above.)

Finally, while there’s not as much of a gap, the oldest group also says it’s more likely to be ignoring radio (46% vs. 34%) and newspaper ads (41% vs. 34%).

Research finds Boomers to be more reliant than Millennials on advertising as a purchase influencer. Perhaps when they do pay attention to advertising, older Americans are more influenced by it?

While there does not appear to be much difference in the propensity to ignore ads when sorting by gender, there are some patterns that arise when breaking down the respondents by other variables:

  • Respondents from higher-income households ($100k+) are more likely than those from lower-income households (<$50k) to be ignoring all types of online ads, but the reverse is true for each type of traditional media ad;
  • College graduates are more likely than those without a college education to be ignoring each form of online ads, while there is no statistically significant gap when it comes to TV, radio and newspaper ads;
  • Those with kids at home are less likely to be ignoring each type of ad; and
  • Married respondents are more likely to be ignoring each type of ad save for radio and newspaper ads, where there is no gap.

So how can online ads get more attention? The survey lists some potential improvements, finding that respondents would be most likely to pay more attention to funny (40%) and entertaining (32%) online ads, continuing what appears to be Americans’ love affair with humorous advertising.

Fewer would pay more attention to online ads if they had stunning graphics (19%), were interactive (12%), featured a sexy man or woman (10%), or were game-ified (7%). But the fewest votes went to ads where the celebrity is the spokesperson (6%); see here for more details regarding the influence (or lack thereof) of celebrities in advertising.

As for the demographics of those responses: in general, younger groups are more likely to want online ads to be funny, as are respondents with children and those who are not married.

About the Data: The survey was conducted online within the US by Harris Interactive on behalf of Goo Technologies from January 17-21, 2014 among 2,047 adults aged 18 and older.

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Digital Ad Tactics – Spending by Industry [report]

Digital Marketing
US digital ad spending continues to grow. Between 2012 and 2017, investment in online and mobile paid media will increase from $36.80 billion to $62.83 billion, for a compound annual growth rate of 11.3%, according to a new eMarketer report, “Digital Ad Spending by Industry 2013: Forecasts and Key Trends.” Advertisers across vertical industries are making use of a host of proven digital ad tactics, while at the same time ramping up investment in newer formats such as digital video, real-time and native advertising.

While investments are unquestionably rising across the board, each industry is adopting digital at its own pace as it rises to meet its own unique challenges and opportunities. Some industries—such as retail and financial services—are early adopters in their use of digital tactics as part of integrated, multichannel campaigns. Others—such as healthcare and pharma—are further behind on the adoption curve.

In 2013, eMarketer also did a deeper analysis of digital ad spending to determine how much marketers in each industry were investing in tactics primarily focused on obtaining sales or leads (that is, direct response) compared with those designed to drive favorable opinion about a brand. Spending by some verticals—including travel and retail—skewed much more heavily toward direct-response advertising. Others—such as consumer packaged goods—remained more focused on branding.

Each vertical’s media mix was closely tied to industry dynamics, market conditions and advertising objectives.

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