Online advertising ecosystem (Click Image To Enlarge)
Internet ad spending grew 22% in 2011 to $31.7 billion, according to the latest data from the Interactive Advertising Bureau and PricewaterhouseCoopers. That growth rate tops last year’s 14.5%, indicating that digital advertising continues to ramp up after a recession-induced setback in 2009.
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For the fourth quarter of 2011, online ad spending hit nearly $9 billion -- up 20.4% from a year ago, and 14.7% from the third quarter.
According to the IAB, online advertising by media segment breakdown as follows:
- Mobile advertising -- which it began tracking in 2010 for the first time -- was the fastest-growing segment in 2011, jumping 149% to $1.6 billion from $641 million in 2010. Mobile also doubled from 2.5% to 5% of total online ad dollars this year.
- Digital video advertising -- which the IAB includes as part of display advertising -- saw strong growth as well, rising 29% from $1.4 billion to $1.8 billion. Overall, display spending rose 15% in 2011 from $9.6 billion to $11.1 billion.
- Search advertising - enjoyed even bigger gains, growing 27% from $11.7 billion to $14.8 billion. It continued to make up the largest proportion of online ad spend: at 46.5%, up from 44.8% in 2010. That increase came at the expense of display, which declined from 37% in 2010 to 34.8% last year.
The largest online ad spenders by industry catetogy were:
- Retailing - 22% or ($7.1 billio, up slightly from 21% or $5.5 billion in 2010)
- Financial Services - 13% ($4.1 billion)
- Telecom - 12% ($3.9 billion)
- Automotive - 11% ($2.9 billion)
- Leisure Travel - 8% ($2.4 billion)
- Computing - 8% ($2.7 billion).
Those proportions all held fairly steady through 2011, varying only by a percentage point here and there.
According to the IAB, online advertising by model type was as follows:
- Performance-based advertising - Fueled by search and mobile spending, performance-based advertising gained ground in 2011, accounting for nearly 65% of total online ad dollars, up from 62% in 2010.
- CPM-based advertising - dipped slightly from 33% to 31.3%, while dollars going to hybrid-priced models also declined from 4.8% to 4.2%.
By its reckoning, the IAB said the $31.7 billion in Internet advertising in 2011 eclipsed the $31 billion in cable TV advertising last year, making the category second only to broadcast TV ($38.5 billion). IAB President and CEO Randall Rothenberg, in announcing the 2011 figures Wednesday said.
“Pushing past the $30 billion barrier, the interactive advertising industry confirms its central place in media."
COMMENTARY:
U.S. Online Ad Spending
For the first time in U.S. history, marketers are projected to spend more on online advertising than on advertising in print magazines and newspapers.
According to a study released Thursday by eMarketer, online advertising is expected to generate $39.5 billion in sales this year — a 23.3% increase from 2011 — compared to a sum of $33.8 billion on print.
That’s impressive growth, especially since 2011 also witnessed a 23% jump in online ad spending, according to eMarketer’s calculations. Online ad revenues should continue to grow over the next half-decade, albeit at a more modest rate, as shown in the chart below. Total online ad investment is projected to hit $62 billion by that time.
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U.S. Print vs Online Ad Spending
The forecast for print is foreboding. Marketers are expected to continue cutting their print advertising budgets for the next half-decade, spending $32.3 billion in 2016, 10% less than what they invested in print ads in 2011.
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U.S. Television vs Online Ad Spending
Spending on TV promises to be largely unaffected by growing online ad budgets, although the gap between the two is set to narrow significantly. U.S. marketers are expected to spend $72 billion in TV advertising in 2016, up 18.6% from 2011.
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Social Media Ad Spending
In its report titled “Worldwide Social Network Ad Spending: 2011 Outlook” eMarketer forecasts global advertising spend across social networks will reach $5.97 billion in 2011 which represents a growth of 71.6% compared to 2010.
Social network advertising spending will account for 8.7% of total online ad spend in 2011.
US will represent the majority of spending accounting for 51.6% of the total.
Facebook will be the dominant social network and will receive 68% of worldwide social network ad spending this year. Indeed, Facebook ad revenues are expected to rise 118%, to reach $4billion in 2011.
To conclude, social network advertising is growing and is increasing their representation. “Major marketers are integrating social media into their overall marketing programs,” said Debra Aho Williamson, eMarketer principal analyst and author of this report. “As they do so, advertising in social destinations is becoming a more logical part of their plan.”
eMarketer reported that in 2011, there was a 55% hike in ad spending on social networking sites by U.S. marketers. In 2010, they spent $1.99 billion for advertising on popular social media platforms. That’s not all, in 2012, spending on advertisements by marketers will even increase to 27.7% and the net figure will come to around $4 billion. Facebook earned the lions share of social media ad spending in 2011.
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eMarketer predicted that making profits based on ad revenues will continue in the 2012 also, as the Menlo Park-based social networking site is expected to garner $5.74 billion from ad revenue worldwide. However the juggernaut like in-exorability of Facebook astounds eMarketer principal analyst Debra Aho Williamson, she says,
“If Facebook can continue to increase its global user base and boost the amount of revenue it generates per user, it could even surpass these forecasts. Facebook must continue to innovate its user experience and its ad platform.”
Overall, it looks to be a healthy year for the ad industry, with total U.S. ad spending forecast to grow by 6.7% to $169.5 billion. eMarketer attributes the bump to investment in campaigns ads and mobile advertising. Total ad spending is set to reach nearly $200 billion by 2016, of which online will account for a third.
Courtesy of an article dated April 18, 2012 appearing in MediaPost Publications Online Media Daily, an article dated January 19, 2012 appearing in Mashable and article dated February 3, 2012 appearing in Hi-Media Group Blog
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