The Future of Online Advertising

Posted: May 15, 2011 | Author: d8blog | Filed under: all, amazon, android, apple, apple tv, blog, computers, digital marketing, digital tv, facebook, google search, google tv, i pad, i-phone, interactive, internet tv, IPTV, mobile phone, myspace, online advertising, online video, social media, technology, twitter, WOM/viral marketing, youtube | Tags: all, amazon, apple, apple tv, blog, digital marketing, facebook, google, google android, google search ad, google tv, internet advertising, internet tv, myspace, online advertising, online campaign, social advertising, social entertainment, social entrepreneur, social gaming, social media, social networking, technology, twitter, WOM/viral marketing, youtube | 1 Comment

Over the next few years the online advertising landscape is predicted to change dramatically.

We are moving on from the days of analogue, advertising mediums are changing and so are marketers…so where is digital marketing heading?

The Asia Pacific Digital Marketing Yearbook 2010 emphasises there is a battle going on to determine which platforms will host the majority of online users’ activities. ‘The days when a portal was a web user’s main access point to the internet are long over, but it’s not yet clear what will take its place. Will the future be driven by search? Social networking? Mobility? A device? An application? A browser? Microblogging?

Google, Facebook, Twitter, Apple, Microsoft, Skype and Yahoo! are just a few of the international players experimenting with different mixtures of applications, content and devices in their quest to be dominant.’ Have a look at the digital marketing yearbook for facts on digital marketing in 2010, from the major media producing countries in the Asia Pacific (Australia included). I’ve analysed a variety of industry sources to compile together facts in this blog – worthwhile checking if you are involved or interested in online advertising [1]

Teresa Sperti in her Digital Marketing Lab blog explains ‘Consumer consumption of video, mobile and social are all starting to play a role in the way we plan and buy media, however by 2015 our online media schedules will look very different to how they look today.’ The Digital Marketing Lab also released an article indicating online advertising in Australia is forecasted to grow at a compound annual growth rate of 15.4% every year for the next four years, while the same forecast for print growth is 1.9% and for free TV is 3.9% (see point 16 of article). A summary of online advertising expenditure in Australia indicates the 31 March 2011 quarter recorded an increase of $88.5m (or 17%) in online advertising expenditure from the comparable prior first-quarter in 2010.

The Internet has continued to grow in significance when compared to other ad supported media. In 2010, Internet Advertising surpassed advertising revenues in Newspapers in the US!

The International Journal of Advertising in (2009) examined what has been learned about digital advertising on the internet and new media, and proposed that there are six principles of digital advertising that can be widely applied to new media:

marketers must be sensitive to consumer concerns about privacy and spam
consumers are more likely to be receptive to digital ads from marketers they trust
consumers are more likely to be receptive to respond to digital ads for products that are relevant to them
digital approaches that incorporate interactivity are more likely to be effective
advertising messages that are entertaining have a higher chance of success in the digital context
in the long run, new media messages need to build the brand to be effective

I have observed these 6 principles throughout online research; in fact you will notice some points perusing through article references within this blog. The 6 principles apply well to viral advertising, and are apparant in successful digital campaigns to date (see video advertising example below).

The journal also states multiple factors have contributed to the internet achieving the status of one of the major advertising mediums that it is today. By 2005 advertisers as well as search engine companies began to understand how consumers searched for information online, and noticed a substantial opportunity for advertising and behavioural targeting by matching advertisements to searches.’

Search & Directories advertising is top of the line for ad statistics, and is only going to get bigger in my view. This is evident from statistics released on internet advertising in 2010. In the US, Search and Display continue to lead ad formats with revenues accounted for 45% of Q4 2010 revenues, down from 47% in Q4 2009. Search revenues totaled $3.3 billion in Q4 2010, up 14% from Q4 2009, when Search revenues were $2.9 billion.

In Australia, General Display advertising and Classifieds advertising accounted for 21.59% and 24.17%, respectively, of the total advertising expenditure for the first-quarter 2011, while Search & Directories advertising comprised the remaining 54.24%.

I believe the advent of Internet TV is a BIG player in the future of online advertising. Have a look at a blog I wrote on Google TV. Google TV is still in it’s infancy in the US, but after necessary product improvements I think this type of Search TV will be a competitive force in the Internet TV market. An important product for marketers to note in the future of online advertising.

Online Advertising – Info and Hit Predictions

Video Advertising

Video advertising is one of the fastest growing segments in the online advertising market. Nielsen indicated online video usage was up by 45% in the US in January 2011. An article by Media Notes says an IAB report from December 2010 indicates that 69% of marketers and 55% of agency executives say digital video advertising will rise in the next 12 months. ‘Digital marketers say consumers show a higher engagement rate with online video, according to the survey. Digital video is more trackable and targetable and digital video production is less expensive. The findings also say marketers will shift TV ad dollars to digital video because of better ROI, while media agencies and television will shift more emphasis to digital video to follow target audiences.’

Google predicts by 2015, 50% of ad campaigns will include video ads bought on a cost-per-view basis (that means that user will have choice whether to watch it or not). Digital Marketing Lab says advertising is still however in its infancy despite the fact that consumption of video by Australian consumers is significant. ‘Whilst video advertising provides a significant opportunity for marketers it is not without its challenges. As some video channels / networks allow viewers to skip advertisements, marketers will need to provide more than a traditional TV style commercial– engagement and entertainment will be far more important in the video ad space.’ Note the Old Spice Advertisement below, pure entertainment, one of the Top 10 viral video ads of all time.

Indeed entertainment and engagement are important points to note, in addition to choice. As this article by Bost Innovation explains, the importance of choice changes the social dynamics between ads and consumers. ‘When consumers can choose to watch ads, as opposed to being interrupted by them, they share and recommend those ads to friends and family, blast them across social media sites like Facebook and Twitter, embed them on their blog and site, copy and repost them across hundreds of video-sharing sites, and more. This is Earned Media, and it’s the crown jewel of advertising.’

YouTube Channels

Most major brands have a presence on Social Media networks like Facebook and Twitter, but YouTube is more of an afterthought according to Mashable. A surprisingly high number of branded YouTube channels (eg.Amazon) are sparingly updated and have few followers. Mashable says companies like Amazon are missing out on a big opportunity. ‘A YouTube channel doesn’t have to merely be a vehicle for new commercials. It can house games, behind-the-scenes stories and, best of all, a new, visual way to interact with your fan base.’ Check out these 5 Branded YouTube Channels That Get it Right .

Viral Video

Visible Measures says 2010 was the year social video advertising came crashing into the mainstream. Their report Social Video Advertising: 2010 in Review says categories that produced millions of views in 2009, generated hundreds of millions in 2010. The number of active brands in social video advertising more than doubled. Campaigns like Old Spice’s The Man Your Man Could Smell Like, Nike’s Write the Future, and Pepsi’s Oh Africa captured the attention of audiences across the world.

Brands realized the power social video has in influencing consumer choice and began waging major battles in attempts to dominate their category. Visible Measures says these trends are likely to continue into 2011. ‘As more audiences come online and watch social video, we’ll see more brands, more campaigns, and more competition, all in efforts to influence consumer choice.’

Viral Video: What’s Hot In May 2011

· Top 10 Viral Video Ads Chart – May 2011 – Viral Ads on the Visible Measures Chart

Google Video Search Ads

If you aren’t counting on an Ad to go viral, sponsored video search ads were launched by Google on March 24th. Media Ads is still in limited release to major motion picture studios promoting new release features. Google plan ‘over time’ to offer Media Ads to advertisers in more industries to help them promote their videos on Google.com. The new search ad could be utilised by media industry advertising companies and business in future.

Internet Search TV

As forementioned in this article I think Internet TV, and in particular Google TV could be big if product improvements are made to the first version. See my blog on Google TV for more.

Mobile Advertising

Digital Marketing Lab notes by 2015 it is anticipated that mobile internet will surpass desktop internet usage – and with that mobile advertising is expected to undergo rapid growth. Global mobile advertising spends will total $3.3 billion in 2011 and this figure will balloon to $20.6 billion by 2015. Teresa at Digital Marketing Lab states ‘like video, mobile too will bring several challenges. Small screens / ad formats will make it more difficult for marketers to communicate their message. The power of mobile combined with local however will also provide new opportunities for marketers to connect with consumers when and where it is relevant…Over the next 4 years will see significant investment from Google, Facebook and start ups in the mobile / local space, which will also result in new ad formats and opportunities for brands to target new and existing customers.’

The Android network is growing in a bid to compete against Apple, which includes both platforms advertising networks – Android Market (Android Software used in Android, other Phones, Google TV, Tablets) and iAd (Apples Advertising platform for Apps, iTunes, iPhones and iPads, Apple TV). Both companies are currently under fire for their location tracking devices, and privacy breeches. Location browsing mobile advertising was also recently launched as fellow blogger Rowdy highlights, again though there is clear concern for privacy issues with such advertising.

I agree that mobile advertising is on the rise, and if challenges of the medium are surmounted it should be a good avenue for digital advertising.

Social Advertising

ADMA says Australians spend more time on social networking sites than anyone else in the world (seven hours a month) and 27% of all Australians blog!

In their article The Changing Face of Online Advertising, Digital Marketing Lab indicates in 2011 US marketers are expected to spend $3.08 billion on social network advertising, which is roughly 10% of total ad spend online and an increase of 55% from 2010. Whilst we are behind the US when it comes to digital, marketers take up of social media in Australia is on the rise so there is no doubt that social advertising will make up a larger slice of the advertising pie in the future.

Another growing trend is that of Social Gaming. Social gaming organizations like Zynga building branded experiences into games – for example McDonalds use of Farmville to provide virtual McCafe to players so they can work at double the speed. Mashable features an article on Hot Social Gaming Trends.

In America most marketers plan to increase social media spend this year. Mashable says a report by IAB (US) notes an overwhelming number of marketers consider social media to be integral to their strategies this year, and 70% plan to increase their social media budget by more than 10% this year, according to a poll from Effie Worldwide. ‘Much of that spending will go toward trying to find new Facebook fans, which 35% of respondents said is their main goal in 2011. “Increase our presence on mobile” was number two on that list, coming in at 22%.’ Have a look at the Mashable article for more IAB findings.

Whilst Facebook is the lead for Social Advertising, I think marketing through Four Square and Twitter (see my blog) will increase in future. I believe MySpace still works for music fans and Social Entertainment, but not sure of growth unless they launch a campaign to grow a new fanbase!

A growth network and potentially big area for B2B (business2business) and B2C (business2customer) online advertising is through LinkedIn. With the recent announcement of the company public listing on the stock exchange, and a increasing member base worldwide ($2million just reached in Australia), this online platform is surely a great avenue for advertising now and in future.