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Today’s Burning Question: Key Takeaway from the New IAB Internet Advertising Revenue Report?

Written on
Apr 14, 2014 
Author
Mike Daly  |

ADOTAS — U.S. online ad revenue surpassed broadcast TV ad revenue for the first time in 2013, rising to $42.8 billion compared with broadcast’s $40.1 billion, according to the new IAB Internet Advertising Revenue Report released last week.

For Today’s Burning Question, we asked our community of industry thought leaders: “What’s your key takeaway from the report?”

Here’s how they responded:


“IAB’s latest findings support the rapid growth LiveRail has been experiencing. The biggest takeaway in our eyes is the fact that Internet advertising spend has now surpassed that of broadcast television and we expect that number will only continue to climb. It’s evident that a major shift in marketers’ focus is occurring, thanks in large part to the proliferation of connected devices and the popularity of viewing content online. The absence of the traditional “seasonal dip” from Q4 to Q1 in regards to Internet ad spend, correlates with what we have seen internally and further illustrates the direction online advertising is headed. Taking into consideration today’s multi-device consumers and their consumption habits, it comes as no surprise that mobile ad revenue is up 123% and has bested display spend for the first time. While the report doesn’t specify, we suspect mobile video makes up a healthy portion of the overall mobile format category. With programmatic buying technology enabling more efficient inventory management, we believe that even more ad dollars will shift to video. The power of online video from a personalization and brand engagement standpoint will also continue to be realized and help contribute to the uptick.” – Mark Trefgarne, CEO and Co-Founder of LiveRail.

“Media consumption for consumers has significantly shifted to online platforms, whether it’s web properties or entertainment sites such as NetFlix, Hulu, Amazon or YouTube. Tablets, laptops and smart phones are all equipped with Apps that allow easy viewing of these web properties as well. These new online channels are not only creating awareness for both mass and niche audiences, they are also able to drive engagement off of the ad, something TV was never really able to do. In addition, televisions come equipped with SmartTV, which enables easy consumption of all of those properties as well. With DVRs and Tivo, television advertising works most effectively for live events such as the Super Bowl. Buying GRPs or TRPs is going the way of the dinosaurs. Online video consumption has overtaken that historical media buy and will continue. Even platforms such as Twitter offers unique social media video advertising that never existed previously. Companies who have relied on traditional television media to reach consumers to create awareness for brands, products or companies, must have a digital video strategy if they are to survive in the new era of digital media consumption.” – LuRae Lumpkin, VP Global Paid Media, Covario.

“Great increases in online yes, but particularly in mobile. Mobile is becoming everything. While advertisers have gained much in online, they are most challenged by mobile even as it becomes the means for marketers to engage w customers. The perception from consumers of advertisers ‘invading their space’ as they move about retail environments, or their daily life is most difficult. Bottom line is advertisers have a way to go.” – Timothy D. Malefyt, Ph.D., Visiting Associate Professor of Marketing, Fordham University Schools of Business.

“The most dramatic change has been the increase in mobile ad revenue. What is encouraging is that the disparity between consumption and ad spend in mobile is being addressed relatively quickly, compared to the rate at which the consumption-spend disparity was addressed in the first dozen years of online advertising in general. And although the IAB report doesn’t specifically call out “social” as a channel, the major social network platforms are certainly major contributors to this boost in mobile ad spend.” – Sean O’Neal, President, Adaptly.

“This report is the culmination of the fundamental shift in the society in terms of how we consume media. Marketers are always following the consumers and it appears that they are finally catching up with digital surpassing broadcast TV for the first time. I believe that we will see major shakeups in the “traditional Media or TV Business” in next couple of years. The key winners will be players operating in Mobile, Video and programmatic space. Its no surprise that Mobile continues to be the fastest growing medium for the advertisers and digital video has shown continuous growth.” – Saurabh Bhatia, Co-founder and Chief Business Officer, Vdopia Inc.

“My key takeaway, as someone who has worked closely with broadcasters for years is that online’s recipe for success (an open ecosystem focused on delivering any type of requested content to any user on any device) is still not recognized by the majority of broadcasters (who instead generally continue to invest in the same type of local news content that they have since the 1970s, and distribute that content through a few, restricted channels).” – Timur Yarnall, CEO, Mdotlabs.

“I’m actually surprised it took this long for online to catch up with TV in ad spend. Media consumption has been on par with TV, while ad spend lagged far behind. It’s only been the past few years that we’ve been nearing parity. This is a clear sign that marketers really get where their audiences are, and they are figuring out to create a holistic media mix across the various media types.” – Richard Jalichandra, CEO, iSocket.

“Platforms analogous to Facebook and YouTube, those with true broadcast scale, are main contributors to this growth and shift in ad spend from traditional platforms into digital. However, the numbers do not provide an accurate picture of today’s marketplace as TV remains strong with 3.5% growth in ad revenues from 2012 to 2013, according to Nielsen.” – Rich Routman, CRO of Sporting News Media.

“Digital advertising continues on its upwards trajectory because the main barrier holding advertisers back—the ability to accurately gauge how audiences engage with ads online—has been broken. Advances in viewability technology have given advertisers the tools they need to justify spending more in digital. When advertisers are ensured that they are spending money on ads that are actually being “seen” and measured, they would rather put their money into digital. With broadcast TV, there is nothing preventing the audience from stepping out of the room during a commercial break and completely missing the message. Advertisers are beginning to realize that digital advertising is intelligent enough to get rid of that waste, so that all ad time is completely optimized. Using new metrics including “time spent” are the new safeguards for digital advertisers and working with many of the largest advertisers has given WebSpectator a firsthand glimpse at this trend. Put simply, advertisers want the same security and safety for digital spend as they receive for TV spend.” – André Parreira, CEO of WebSpectator.

“If we compare user time spent and ad inventory available across all digital to that of TV, then there should be no surprise to the fact that digital ad spending has surpassed TV ad spending. The truly exciting aspects of this recent stat are twofold. First, more marketers are anchoring their budget decisions to user behavior, giving them the power to explain their marketing decisions. Second is the balance of spend. Despite all the technological advancements of digital, the fact that digital and TV spend are still equal is a continued demonstration of how dominant TV remains at aggregating mass volumes of viewing behavior. The question that lingers is simply how long we continue to measure TV vs. digital? Consumers do not have channel conflict, just channel choice. In reality, a consumer of sight, sound and motion will do so online, on TV and on any device. At some point organizations will shift and start to talk about spend across the categories of directional communication (linear vs. non-linear), and/or content form (text-based vs. sight, sound and motion).” – Lance Neuhauser, CEO, 4C.

“Despite this milestone, Online Advertising has still not tapped the full growth potential from brand dollars. This is evidence by the continued dominance of search, the small percentage of video advertising, the prevalence of performance based pricing and the fact that retail and financial services advertisers account for a third of all spend. The industry still struggles to deliver real and perceived emotional resonance to brand advertisers and remains for the most part a direct response driven world.” – Marc Johnson, CMO, Resonate (and former analyst and part of team responsible for the 1997 Jupiter Online Advertising forecast of $940M).

“While it’s been predicted for almost a decade (and met with considerable skepticism at the time back then) it’s certainly great to see audience and Internet ad spend finally getting a bit more in sync. For those of us who were around in the early days, the inevitability of it all has proven to be quite satisfying. Never the less, something tells me there are plenty of naysayers still around, so it’s too soon to declare victory just yet.” – Lon Otremba, CEO, Bidtellect.

“It should come as no surprise that digital video revenues are up 19 percent since 2012 as advertisers are finding it’s increasingly the best way to reach today’s consumer in a multi-screen world. As the industry harnesses the power of real-time data and automated buying platforms to make integrated TV and digital ad buys, you should expect more advertising dollars to flow into digital video driving even more impressive growth in the years to come.” – Craig Whitmer, Vice President of Platform Operations, BrightRoll.





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.

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