The Future of Display Advertising

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1 The Future of Display Advertising Renee Cook Media Analyst marketing + technology sundog fax: th st s floor 6 fargo, nd

2 Love them or hate them, online display ads are here to stay. People are watching videos online at an ever increasing rate as well as reading newspapers, magazines, books, and listening to music online. With access to so many digital devices, be it smart phones, tablets, e-readers, gaming consoles or your trusty laptop, people are connected 24/7 and advertisers are taking note. What s the driving force behind this sudden growth? Online video ads and Facebook are two of the biggest factors driving display ad growth. Growth According to emarketer, total online display ad spending, including online video, banner ads, rich media and sponsorships, has already brought this category in close range of search. What s more, emarketer predicts that display will continue to grow at a faster pace than search and is on track to surpass search by Video Video ad spending has seen tremendous growth and emarketer predicts that by 2013, video ad spending will be the third-largest online ad format. Further, Forrester Research predicts U.S. online video ad spend will reach $5.4 billion by By 2015, emarketer predicts nearly $50 billion will be spent on online ads in the US. Break Media, a leading creator and publisher of digital video content, recently announced the findings of their annual Digital Video Advertising Trends study. The following are some key findings from the study. More than 90% of all advertisers plan to use video advertising networks (VANs) in the coming year, and the VANs share of all digital video will grow from 20% to 41%. 2

3 Sixty-eight percent of advertisers will increase their share of online display advertising devoted to video ads in the coming year. More publishers and networks to offer Cost-Per-View pricing model over Cost-Per-Thousand or Cost-Per- Click. Advertisers increasing video ad spend in the next year will shift dollars from television budgets (32 percent), non-video display budgets (45 percent) or increase overall advertising budget (38 percent). Whether marketers are running simple flash banners, preroll video or text based display ads as seen on Facebook, marketers have several ways in which they can target their display ads. Content Delivery Advanced targeting technology allows advertisers to target ad spend to reach relevant audiences using their ad budgets more effectively and efficiently. From contextual targeting to retargeting, there are many targeting and placement options that content delivery strategists must now consider when planning display campaigns. Most advertisers still prefer pre-roll, but new formats including mobile video and advertising on connected devices are catching the attention of advertisers. Aside from video, the continued growth of Facebook has been another factor in display ad growth. Facebook Founded in February 2004, Facebook has grown to be the world s largest social network. There are more than 800 million active users on Facebook, half of which log in on any given day. These users interact with more than 900 million pages, groups, events and community pages. All this activity makes way for an enormous amount of display ad inventory. Facebook s U.S. display ad revenues are projected to increase 31.3% from 2011 to 2012, according to emarketer s estimate. Contextual Targeting As defined by Wikipedia, this is a form of targeted advertising for ads appearing on websites or other media, such as content displayed in mobile browsers. The advertisements themselves are selected and served by automated systems based on the content displayed to the user. The content in the ads is in direct correlation to the content on the page. For example, say you are reading the sports page of your local newspaper online, if they offer contextual advertising, you are likely to see ads related to sports. Retargeting: Retargeting allows advertisers to find previous website visitors across the internet and display relevant ads to drive those site visitors back to the advertiser s website to complete a transaction. Retargeting seeks out consumers based on their previous online actions, whereas their actions did not result in a conversion. Statistics show that 95 percent of visitors who browse an advertiser s site do not complete a transaction on 3

4 their visit. (9) Retargeting is highly effective in reaching a precise audience and as they are likely ready to complete a transaction. A study done in 2010 by comscore on online performance, retargeting was shown to offer the best performance. Further, retargeted consumers are nearly 70 percent more likely to complete a purchase as compared to nonretargeted consumers. Not only are retargeted customers more likely to complete a purchase, but they also spend on average 50 percent more than non-retargeted consumers. (8) Conclusion With all these estimates and predictions about the growth of display advertising, it will be interesting to watch the New Year unfold. One important thing to keep in mind is that as display advertising grows, it will become even more important for marketers to deliver compelling content. Display ads are graphical in nature giving marketers the opportunity to engage with consumers and build their brands. A well thought-out and highly targeted media plan becomes meaningless without compelling content. Compelling content can also help engagement rates. Content needs to draw the consumer in and give them a reason to interact with your brand. 4

5 References emarketer (June 20, 2011) Display on Trajectory to Surpass Search Ad Spending Retrieved July 7, 2011 from emarketer.com/article.aspx?r= emarketer (June 8, 2011) US Online Ad Spend Poised to Grow 20% in 2011 Retrieved August 12, 2011 from Break Media Digital Video Advertising Trends: 2012 Retrieved November 28, 2011 from digitalvideoadstudy comscore (September 2010)When Money Moves to Digital, Where Should it go? Retrieved October 12, 2011 from Should_It_Go Marketingcharts.com (December 20, 2011) CTR Top Video Ad Success Metric Retrieved December 22, 2011 from emarketer (June 8, 2011) Facebook Display Revenues to Nearly Double This Year Retrieved August 29, 2011 from Wikipedia Contextual Advertising Retrieved December 30, 2011 from Rudelle, JB, (October 19, 2010) Reaching internet shoppers through retargeting Retrieved November 5, 2011 from Scribemedia.org ( September 8, 2010) Retargeting Re-Engaging the Departed Consumer Retrieved November 27, Tech Crunch (June 9, 2011) Google Ad Exec Predicts Engagement Rates For Display Ads Will Increase 50 Percent By 2015 Retrieved December 16, 2011 from 5

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