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Today’s Burning Question: IAB Internet Advertising Revenue Report (Pt. 1)

Written on
Apr 17, 2013 
Author
Mike Daly  |

ADOTAS – Today, we’re asking our esteemed panel of thought leaders the following Burning Question: “What are your thoughts about Tuesday’s IAB announcement that digital advertising revenues climbed to a milestone high of $36.6 billion in 2012?”

Here’s how they’ve responded:

“”While digital advertising is growing rapidly, its still far from where it should be. The simple fact is that television is still attracting twice as much advertiser spending as digital at $72bn vs $36bn. Relative to time spent by consumers (26% of media consumption time), digital media is still only attracting 22% of media spend; despite being substantially more measurable, efficient and engaging than most other media types. Let’s also recognize that digital video is the fastest growing sector of the display market, increasing 29% to $2.3B. We can certainly be proud of the growth we’ve achieved as an industry, but we still have a long way to go.” – Mark Trefgarne, Co-Founder/CEO, LiveRail.

“All of us in the industry would say, what took so long? With the continued growth of search, the proliferation of mobile usage, the advancements of display impact and effectiveness and the growth in digital video, we won’t be at $40 billion for long. I’d say this is just the beginning. $100 billion is clearly in our sights.” – Penry Price, President, Media6Degrees.

“”Digital advertising’s record-breaking growth demonstrates that, as consumers become further immersed in the digital life, marketing dollars follow. That’s particularly true of mobile devices, which have become so integral to our daily activities that we can’t go anywhere without them. The fact that mobile is the fastest-growing ad category in the IAB Revenue Report reflects this new reality. We can count on that growth rate and mobile’s overall share of the digital revenue to continue its climb.” – Eric Litman, CEO of Medialets.

“This should in no way be surprising. Mobile is finally becoming the juggernaut we’ve been expecting. Online video has hit its stride. Content that used to be contained to TV is now easily viewed via web enabled devices. Marketers follow eyeballs, eyeballs spend more time with digital devices than ever before and digital eyeballs can be targeted and tracked with a level of granularity that its offline counterparts could only dream of. If online advertising didn’t see an increase in 2012 and doesn’t continue to see record highs for the foreseeable future, that’s what should be considered newsworthy.” Ophir Tanz, Founder and CEO, GumGum.

“We’re not surprised at the steady and relentless increase in digital advertising. Brands are shifting more and more of their advertising budgets to digital – both for branding campaigns and direct response. However, we’d wager that digital advertising is going to go even higher given the growth of digital video advertising. For the most part, most TV advertising has stayed with TV. But, that will begin to change. Two trends will drive the move of TV advertising to digital video advertising – audience targeting (digital will offer TV advertisers more refined targeting than broad TV campaigns), and mobile video. Consumers are already showing a voracious demands for video content on tablets and smartphones. We think that viewership – mobile video – will only increase in the next 2-5 years. We’re living in a digital world, and the advertising spend across all industries will begin to reflect that.” – Jamie Goin, VP Business Development, Dynamix.

“It’s exciting to see the industry growing, but context is key. The reality is that consumer digital media consumption growth is exponentially higher than digital advertising spend growth. The gap is widening, and will continue to widen until the industry solves the audience recognition crisis in both mobile and desktop platforms.” – James Lamberti, Vice President and General Manager, AdTruth.

“A record high is not surprising given three factors: returning strength to the economy; expanding digital advertising opportunities that include mobile, tablets, video, and native ad units; and the effectiveness of audience buying through exchanges. These factors compound and reinforce each other, and we should expect their effect to continue through 2013.” – Bill Guild, VP, Marketing and Product Management, ChoiceStream.

“It’s fantastic to see these optimistic figures around mobile and video. And this report just focuses on the U.S. We’re seeing incredible traction and hunger for innovative ad units in developing markets such as India and Indonesia where mobile is many people’s first and only experience with the Internet.” – Judith Coley, VP of Marketing, Vuclip.

“The increase in digital ad revenues is exciting, and should be just the beginning.  As marketers see the results of their online marketing – not just in click thrus, and consumer engagement, but in just branding and improved brand recognition – they’ll continue to look to online avenues as top line marketing resources.  The next step will be to spend this budget more smartly, but funneling it into branded content pieces; shorter, punchier and less annoying pre-rolls; and ads that create more interaction between the brand and the consumer.”– Jay Miletsky, CEO, MyPod Studios.

“The biggest part of the story is that mobile is the growth champion, rising 111% from 2011 to 2012, far outshining any other category. Mobile represented 9% of overall spend, almost doubling the 5% in 2011. And, when you look at the trends, total digital advertising (PC digital + mobile) will become the largest category — bigger than broadcast television by the end of 2013. That’s big. Some things the report doesn’t talk about, but that supports this mobile trend:

  1. PC shipments are flat; run-rate shipments for mobile tablets will overtake them in 2013.
  2. Search (and therefore Google) now dominates digital, but this year in mobile display will overtake search. And now Facebook is emerging as the biggest driver of mobile display advertising, especially with Home on Android phones.
  3. Mobile display gets higher click-through and engagement rates than PCs, which is starting to attract a lot of performance advertising spend from big markets like Financial Services, Insurance, Education and Automotive.
  4. Content companies like Pandora are starting to make significantly more money in advertising on mobile compared to PCs.
  5. Advertisers are obsessed now with connecting the broadcast experience with a companion tablet or smartphone, representing a paradigm shift in audience targeting and brand engagement.

“Final thing to note is that the IAB report is U.S. only. When you look at global data, the trend is even more pronounced. In emerging markets, mobile is the primary onramp to the Internet and is quickly becoming the primary screen of content consumption (and by proxy, advertising).” – Mahi de Silva, CEO, Opera Mediaworks.

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Mike Daly is an award-winning writer and editor with 30 years of experience in publishing. He began his career in 1983 at The News of Paterson, N.J., a long-since defunct daily paper, where at age 22 he was promoted to the position of Editorial Page Editor. Since then he has served in managerial capacities with several news organizations, including Arts Weekly Inc. and North Jersey Media Group in New Jersey and Examiner Media in New York. His work has been honored on numerous occasions by the New Jersey Press Association and the Society for Professional Journalists.

Reader Comments.

These numbers must be like the billions spent on you tube..lots of bucks for the aggregators a smell for the publishers doing the work…we have seen eCPM continue to drop and long time partners pausing and then canceling their schedules…our traffic is up revenue down – huh, so where are these ad dollars really going????

Posted by Bob Gordon | 2:46 pm on April 17, 2013.

Mike, this is an interesting study and the commentators have left some thought-provoking responses. In response to this study, I must admit the growth in digital advertising is not surprising, given the proliferation of smartphones and devices. Nonetheless, it is imperative to remember that digital advertising only makes up part of the customer path and advertising that a customer interacts with prior to converting. Don’t get me wrong, online advertisements are valuable marketing touchpoints, but in order to determine their true value, they need to be looked at in terms of the role they play in the overall path a customer takes when navigating marketing and information. Therefore, marketers must look at the context of all touchpoints, both online and offline, such as TV, radio, direct mail, and more, to determine the value each touchpoint played in the overall customer path.

Posted by Jeff Zwelling | 4:23 pm on May 1, 2013.

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