2011 forecast series… Display

by Paul Fisher ON 13 July 2012

In the lead up to the release of Marketing magazine’s annual publication for 2012, The Marketing Survival Guide, we’re winding back the clock to the start of last year and sharing the ‘Industry leader’ columns from 2011′s Digital Survival Guide to see just how much has changed, what has stayed the same, and generally what life was like over a year ago across eight areas of digital marketing, continuing today with ‘Display’.

2 Feb 2011 – With the whole online advertising industry having just passed US$2 billion, the online general display sector of the market has grown steadily in recent times and now exceeds half a billion dollars annually. That’s not bad for an industry that some still criticise as ‘unproven’.

Averaging above 10 percent annual growth and with total internet advertising projected by PricewaterhouseCoopers (PWC) to experience almost 14 percent compound annual growth between 2009 and 2013, the display market is likely to be almost $850 million by 2013. No one will be able to label that as ‘unproven’!

Display online advertising is driven by the three largest industry sectors: financial services, automotive, and computers and communications, with these sectors accounting for almost half the entire display category. But this is about to change and the big story over the coming months will be the growing adoption of online as an advertising platform by three new faces: FMCG, retail and, with one federal and at least two state (New South Wales and Victoria) elections this financial year, government. Each of these new sectors currently accounts for a paltry four to five percent each. That’s a mere $20 million a year and we know billions of dollars are spent by these sectors on other media – so there’s lots of scope for budgets to shift online. The online advertising industry has some big questions to answer in the coming months.

The biggest question is undoubtedly, ‘How can I measure online advertising and my ROI?’ and, in the coming months, the industry, driven by IAB Australia and Media Federation Australia, will standardise online audience measurement in Australia and adopt world-leading hybrid measurement methodology. This will once and for all equip marketers and agencies with numbers they know and can trust. Online audience measurement will be people-based and we will largely see the welcome death of unique browsers as a form of measurement. Reach and frequency, the language of media planners, buyers and marketers alike will finally become available, so that all can compare (online) apples with (other media schedule) apples.

The next question is, ‘How does social media work?’ I’d have to say that I don’t have too much to offer you on this. It’s being tackled by the best brains in the industry and many models are, and will, be presented. Yet I think we are quite a way off meaningful and standardised measurement of tweets, fans and likes etc.

I do know, though, that communities will become the key target of advertisers as they seek existing online communities centred on common interests, hobbies, likes, geographies, social networks, brands, sport, parenting, and other entertainment and lifestyle socio-and- psychographics. So the industry needs to work out how a brand enters and engages with an existing community.

The next question is, ‘How does online display impact my search advertising?’ According to the IAB PWC ‘Online Advertising Expenditure Report’, over half of every online advertising dollar is spent in search, so marketers need to be able to see and measure how display advertising affects their SEO and SEM. Stay tuned for the answer – many studies are being done around the world and some Australian studies will be completed and published over the coming months.

Another great question is, ‘How does online advertising uplift my other media?’ This is increasingly important in the channel planning and budget allocation of the $12.5 billion Australian advertising industry. Marketers of beer, shampoo, SUVs, credit cards and holidays want to know what the best combination of media is for their product, their target audience and their campaigns. Some great work is coming out of the UK and US on cross-media impact and measurement, and you can expect that this will continue as TV broadcast businesses and newsprint and magazine publishers look to leverage their combined reach and engagement through their multi-channel media assets.

In my view, rich media and online video content and advertising will emerge as one of the, if not the, most effective formats of display advertising. If marketers are serious about reaching, engaging and influencing their audience online over the coming year, they will need to invest in high impact, well-placed, entertaining and engaging rich media and video formats.

As a side point, it’s worth noting that the quality and effectiveness of Australian-produced online creative is world leading and more investment is needed to develop our burgeoning home-grown creative talent.

Online behavioural advertising will be ubiquitous, contextual advertising, geo-targeting and more micro location-based advertising will grow, as will re-marketing. Privacy will continue to be front and centre of the debate around industry self-regulation versus government intervention.

The important final point is that online advertising growth is down to consumer behaviour. It’s not the technology or the device that’s driving this online advertising revolution and evolution. So, ultimately, the brands that invest in building their strategy and implementation around the views, needs, wants, likes and dislikes of the consumer online will win. It’s that simple.

Rich display and video ads boost purchase intent

by Marketing ON 24 May 2012

Rich display and video ads not only achieve higher online engagement rates, but are also up to four times more effective at building brand measures than the average campaign, according to Millward Brown.

A study conducted by the researcher on over 80 Australian ad campaigns found that measures of brand awareness, brand favourability and purchase intent were significantly higher among respondents exposed to video and rich display ads than simple flash or static ads.

Comparing the measures between a group exposed to the ads and a control group, the study found that combining pre-roll video ads with flash banner ads yielded the best results, boosting brand favourability by 4.7% and purchase intent by 4.3%.

Video, which includes pre-roll and other video embedded into the page, by itself was less effective, but still managed to boost brand favourability by 2.3% and purchase intent by 1.5%.

NB: Data shows uplift in measure as a result of one exposure to each ad format.

The key to getting the most out of high impact advertising, such as video, is combining it with other formats and managing the frequency, says director of Millward Brown’s media and digital solutions, Mark Henning. “Smart integrated planning using multiple formats can yield big benefits,” Henning says, suggesting the use of high-impact placements at a low frequency, complemented by standard banner placements to avoid over-exposure and extend the life of a campaign.

The frequency of exposure to display ads plays an important role, with higher frequency not a positive thing in all cases. Video formats were found to be stronger performers at lower rather than higher frequencies, particularly for brand favourability and purchase intent measures. In fact, over-exposure to high impact formats can drive down attitudes toward a brand, particularly purchase intent.

For standard or flash banner ads, a frequency of five to eight is the most effective range and, given the vast majority of web browsers only glance briefly over banner advertising, brand marks such as logo or message should be present in every frame to maximise effectiveness. If these don’t come across within a few seconds at any point in the ad’s rotation, impressions can be wasted, the study found.

“To maximise effectiveness of online banners, we need to make every frame of the creative work to convey brand and message,” Henning adds.

A constant brand and message presence in the ads showed clear benefits, with awareness, favourability and purchase intent measures more than double for those with 100% logo presence over those with only partial presence. A similar trend was noted for ads with 100% message presence compared to partial message presence.

The days of solely measuring online campaign success on a cost per click or lead-generation basis are fading, Henning says, with these measures indicating engagement with the ad itself rather than its success in improving brand metrics.

“The adoption of tablets, continued growth of mobile, and the convergence of digital and television open a world of interesting new brand interactions, and getting brand building right on these platforms will only become more vital as digital moves closer to the heart of media and creative campaign planning.”

Currently, constant logo and message is not something advertisers are implementing universally, with nearly 40% of the campaigns tested not featuring the brand in every frame and over half without the message present across the creative.

Online ad spend to exceed $3b earlier than expected, as display bounces back

by Marketing ON 7 May 2012

Online advertising expenditure posted first quarter growth of 19% year on year for the period ending in March, driven by a surge in display advertising.

Figures compiled by PriceWaterhouseCoopers for the Interactive Advertising Bureau (IAB) put the online ad industry at $713 million in quarter one of 2012, and on track to reach $3 billion this calendar year.

Search and directories continued to dominate the sector during the current period, accounting for 55.5% of revenue, or $395.7 million, grew 21.4 percent year on year to account with directories growing at a faster rate than search during the period.

Display advertising bounced back after lower than expected growth last year, recording year-on-year growth of 18%, its highest increase since 2008. It now ranks in third place by share of revenue, with 21.6% of the market, just behind classifieds which grew 13% year on year to account for 22.9% in the period ending 31 March.

CEO of IAB Australia, Paul Fisher, comments that as more advertisers moves online they are enjoying the benefits of measurability and aren’t being disappointed by results. “The continued growth of online reflects the strengthening confidence of marketers and agencies that online is their medium of choice,” Fisher says. “In this challenging economic environment they look to online to provide measurability, reach, frequency, brand and direct response messaging – and they aren’t being disappointed.”

Classifieds continued to migrate from other media over the current period to reach $165.3 million in revenue, fuelled by strong growth in the real estate, automotive and recruitment sectors.

Within the display category, the FMCG sector posted significant year on year growth as brands looked to reach grocery buyers online. Video, which will be reported in greater detail by the IAB this year, also reported strong year-on-year growth to reach $11.6 million for quarter.

Fisher has no doubt that online advertising in on track to surpass the $3 billion mark forecast for this calendar year, taking its share of the ad market to 20%. “It’s quite possible that we’ll reach that milestone this financial year thanks to increased consumer confidence sparked by further interest rate cuts which we believe will support continued growth in online advertising in key sectors,” Fisher adds.

Online spend from the retail and government sectors continue to flat line, in surprising results from the tracking, considering both are facing tough marketing and communications conditions. Fisher comments, “There is a real opportunity for these sectors to invest their advertising budgets online where they will reach, engage and influence their audiences most effectively and we’ll be working hard through this year to help them understand the potential that online offers them.”

CPM-based pricing continued as the dominant expenditure type, accounting for 74% of advertising expenditure, ahead of the direct response method which made up the remaining 26%.

Online ad spend to hit $4.3b in 2015, but government still absent

by Marketing ON 14 February 2012

Online advertising expenditure is forecast to grow to $4.3 billion and command a greater share of the advertising dollar than newspaper or TV by 2015, says the Interactive Advertising Bureau (IAB), but government spend remains embarrassingly low.

In its ‘Online Advertising Expenditure Report’ (OAER), the IAB reports an ad spend of $2.66 billion in Australia for 2011, representing double digit year-on-year growth of 17% for the industry.

Conducted by PricewaterhouseCoopers (PwC), the report forecasts that online advertising will comprise 29% of advertising expenditure in 2015, up from 21% last year, while newspapers and free TV are expected to comprise 26% each.

According to the CEO of IAB Australia, Paul Fisher, the results mirror the strong growth being experienced by online advertising in the US, UK and other international markets.

“With the current challenging financial climate predicted to continue, we believe advertisers and their agencies will increasingly turn their attention and budgets to the branding and direct response opportunities that can only be found online,” Fisher says.

Overall market growth was powered by the search and directories category which now comprises 53% of the total spend, valued at over $1.4 billion in 2011. General display advertising accounted for 24% of the total spend, while classifieds advertising accounted for 23% of the total spend.

The general display category achieved just 4% year-on-year growth in 2011, but grew strongly in the second half of the year, up 17% on the same period in 2010. Within the category, video advertising performed well with 31% year-on-year growth.

The FMCG and retail sectors started to show higher adoption of online advertising over the year, while the motor vehicle category recorded the highest growth of any industry sector at 13%.

Fisher comments that government spend for the year remained embarrassingly low.

“In the current political climate, with the impending state election in Queensland a federal election in the next two years, I would expect to see a strong surge in the advertising expenditure online by all state and federal political parties,” he says.

Yahoo display and search revenue falls

by Marketing ON 27 January 2012

While Google’s ad revenue is on a high, Yahoo is in decline with drops in both display and search advertising revenue for quarter four, 2011.

The search group also experienced decline in its overall revenue and net income. Excluding commissions paid to partners, Yahoo’s revenue dropped 3% to $1.17 billion for the quarter ended 31 December, compared with $1.21 billion in the same period last year.

Display ad revenue dropped from $567 million to $546 million year over year, a decrease of 4%. Search revenue was down 3%, falling to $376 million from $388 million.

Having only been in the job three weeks, newly installed CEO Scott Thompson outlined his plans for the year ahead: “In 2012 we will be aligning resources behind key areas of focus to enable us to move aggressively in market and grow our business, bringing innovative new products and experiences to both our users and advertisers.”

The company released the following fourth quarter 2011 revenue highlights:

Display revenue excluding traffic acquisition costs (ex-TAC) was $546 million, a 4% decrease compared to $567 million for the fourth quarter of 2010,
display revenue was $612 million, a 4% decrease compared to $635 million for the fourth quarter of 2010,
search revenue ex-TAC was $376 million, a 3% decrease compared to $388 million for the fourth quarter of 2010, and
search revenue was $465 million, a 27% decrease compared to $640 million for the fourth quarter of 2010.

In brighter news for the company, income from operations increased 10% to $242 million in the fourth quarter of 2011, compared to $220 million in the fourth quarter of 2010.

With more than 130 sites across the global Yahoo! Publishing Platform, the firm plans to increase its digital footprint in 2012 and has invested in lifestyle, mail and social TV apps to boost its network.

An agreement between Yahoo, AOL and Microsoft allows ad networks operated by the three companies to offer each other’s premium, non-reserved online display inventory to their respective advertising customers.

Online advertising exceeds $2 billion

by Marketing ON 16 August 2010

Online advertising expenditure in Australia has reached $2 billion, reported the Interactive Advertising Bureau (IAB) in the ‘Online Advertising Expenditure Report’.

The figure reflects spending for the past 12 months, for the year ended 30 June 2010, showing a total expenditure of $2.043 billion. The second quarter in 2010 recorded record expenditure, with $552.5 million spent – a 22% increase from 2009’s second quarter.

Search and directories advertising accounted for 50% of expenditure, while general display advertising accounted for 26% and classified advertising accounted for 23%. In the past year, all three sectors showed growth, with search and directories advertising experiencing the greatest increase of 16%.

In terms of specific industry expenditure – finance, motor vehicles, computers and communications sectors dominated general display advertising, accounting for 44% of it’s usage (down 4% from last year). The largest industry display advertising expenditure went to motor vehicle manufacturers who were responsible for 10.7% of the total.

Classifieds advertising expenditure was led by the real estate industry, followed by recruitment and then automotive.

Commenting on the report, Paul Fisher, CEO of IAB Australia, said “The long awaited and much forecast $2 billion dollar mark has finally been breached. Powered by strong growth in all three categories and with continued double digit growth forecast, Australian online advertising expenditure is on track to exceed $3 billion in the next four years.”

AdMob gets the Google tick

by Marketing ON 12 November 2009

Google has revealed that it plans to purchase mobile display advertising company AdMob for $750 million in stock.

AdMob was founded in 2006 by Omar Hamoui, apparently because he couldn’t find “good ways to generate traffic for his mobile site”, and has built itself on creating banner ads that are viewed on the iPhone or other mobile sites.

“We’ve written in the past about how mobile phones are becoming an increasingly indispensable part of our daily lives, and we continue to see how great devices with full Internet browsers and vibrant app marketplaces are driving an explosion of usage,” said Susan Wojcicki, vice president of product management and Vic Gundotra, vice president of engineering, in a post on Google’s official blog.

The search giant maintains that the decision to purchase AdMob will be beneficial to publishers of mobile websites and applications, and will mean better products, tools and effective monetisation of its content, allowing Google to focus more on its users and less on how to generate revenue.