This is a guest post by Samantha Merlivat, a researcher serving Marketing Leadership professionals.
US online display advertising will grow from $19.8 billion in 2014 to $37.6 billion in 2019, at a compound annual growth rate of 13.7%. The offline ad market, in comparison, will grow at a modest 1% CAGR over the same period. Forrester just released the latest US Online Display Advertising Forecast report, which details why the online display industry will have video and mobile to thank for the double-digit growth rate:
Video advertising will represent nearly 55% of online display advertising revenue on desktop by 2019. Its growth will be cannibalizing primarily static display. Marketers’ preference for video and rich media reflects their new ambitions for online display: They are moving beyond the notion of display as a direct response tool, and starting to explore display as an engagement and branding tool.
Mobile ads will represent 39% of total online display in 2019 compared with 24% in 2014. Tablet display, in particular, will be a medium to be reckoned with in the future as it comes to play a greater role in customers’ path to purchase and in web-influenced shopping.
A year ago, I blogged about the fact that the app economy was blurring the lines and opening up new opportunities, with a lot of new entrants in the mobile space, be it with mobile CRM and analytics, store analytics, dedicated gaming analytics, etc.
Since 2010, more than 40 companies have raised about $500 million in that space! Watch it closely – consolidation will continue, as evidenced recently by Yahoo’s acquisition of Flurry.
While a lot of innovation is happening on the supply-side, too many marketers have not defined the metrics they’ll use to measure the success of their mobile initiatives. Many lack the tools they need to deeply analyze traffic and behaviors to optimize their performance.
Fifty-seven percent of marketers we surveyed do not have defined mobile objectives. For those who do, goals are not necessarily clearly defined, prioritized, and quantified. Only 38% of marketers surveyed use a mobile analytics solution! Most marketers consider mobile as a loyalty channel: a way to improve customer engagement and increase satisfaction. Marketers must define precisely what they expect their customers to do on their mobile websites or mobile apps, and what actions they would like customers to take, before tracking progress. Too many marketers focus on traffic and app downloads rather than usage and time spent. While 30% of marketers surveyed consider increasing brand awareness as a key objective for their mobile initiatives, only 16% have defined it as a key metric to measure their success!
As social media adoption continues to grow in Asia Pacific (AP), so too does marketers’ spending on social advertising. Forrester’s just-published Asia Pacific Social Media Advertising Spending Forecast, 2014 To 2019 report projects that social media ad spending will continue its rapid growth over the next five years. In this period, marketing leaders in Australia, China, India, Japan, and South Korea will increase their investment in advertising on social media (excluding mobile messaging apps) at a 21.6% compound annual growth rate, reaching $5.8 billion by 2019. The rapid pace of growth is mainly due to:
Low market maturity coupled with a large and active social media population. Collective social ad spending in these five AP markets end up being less than half of that in the US in 2014. The maturity of the AP social ad market is low considering the large numbers of people in the region who use social media, and as this market matures it will grow faster than in the US.
Increasing social media consumption will continue to boost ad spending. The percentage of the online population using social media in the five AP markets will increase by double digits from 2014 to 2019. Forrester projects that further Internet adoption will bring even more consumption of social media.
Advertising as we’ve always known it, online or off, worked a bit like this:
Here, advertising content had no life independent of its placement. Print ads, TV ads and radio ads lived only on the servers of the ad companies who created them, and then the media who carried them, for however long they carried them.
Now, a new kind of advertising has emerged:
Here it’s a question of identifying content for promotion that’s already in the wild, on a blog, in a discussion forum, uploaded to YouTube, and then paying to drive more eyeballs to it, because it supports your brand, or it converts interested communities into customers.
It’s particularly attractive for two very good reasons:
It’s already published, and has often already shown potential to create results for the business (in the form of awareness, leads or even sales), and
You can often dial up the eyeballs that go to it, or dial them down, as you see fit, based on performance.
Will the iPhone 6, to be announced on September 9, have NFC and a Sapphire Crystal display?
What about the new Samsung Galaxy Note 4, to be announced at Unpacked on September 3? And will the new Nokia Lumia 730 (a.k.a Superman), to be announced on September 4, have a 5-Megapixel rear-facing camera?
As my colleague Frank Gillett puts it, “Samsung's challenge is to establish an enduring relationship with customers, rather than being an interchangeable Android device maker – and it will take more than a new Galaxy Note to do that.”
[UPDATE 4 Sept: I have updated this post to the original draft, which includes specific and strong recommendations to publishers and marketers. They had been redacted, but a colleague asked "What would you DO about this?" so I saw fit to reinclude them. These are my answers; there are no easy solutions, but these are a step towards guidelines. Updates at the end of the piece, in bold.]
Publishers Are Engaged In Self-Harm, With Marketers As An Accessory
You remember when the email spam problem maxed out almost a decade ago? Or when content farms threatened to turn Google search results into useless piles of keyword-slurry? Or peak belly fat?
There should be a word for the moments when the mechanisms that aim to keep our electronic information corridors running well fail.
It’s shaping up to be one of those moments for the content distribution space (and particularly its subdiscipline native advertising, or sponsored content).
You can pity the reader who arrives at an article on many publishers’ websites today; I’m talking about you, Guardian and Forbes, but also you, New York Times and Washington Post. How is the reader to know if the article they’ve come to read is the product of a straightforward pay-to-publish play, an informal “link exchange” relationship, an “influencer” play, an independent opinion piece, or a piece of pure editorial? They can’t.
For the record: The “clear labeling” commandment is a fig leaf. By the time a reader has gotten so far through the article that they’re wondering why it keeps promoting a particular mindset, product, or opinion and started searching for cruft around the article, the trust in the information, the source, and the medium is lost.
The acquisition of [X+1] by Rocketfuel signals the beginning of the end for “programmatic” ad networks. Since the industry’s shift to programmatic, countless ad networks have changed how they market themselves, adjusting their sales language to mimic legitimate programmatic platforms. The “programmatic” ad network insertion order-based and flat-rate business model has prolonged the black box opacity that spurred the need for demand side platforms and exchange based media buying. It’s only fitting that one of the industry’s most successful “programmatic” ad networks — Rocketfuel — is addressing client demand by making a move that launches them into the digital marketing SaaS market.
There is a lot to be said about the success that Rocketfuel has had in the industry; they have done great things for marketers looking to automate audience prospecting and retargeting. They certainly have done an amazing job marketing their programmatic chops, with the success of their AI product and their success with agencies running performance based campaigns. Their recent revenue growth and the fact that Rocketfuel had the capital to acquire a DSP/DMP in [X+1], are testaments to the success that they have had in the industry.
Despite their success, prolonging opacity for marketers in this market is a short-term strategy, and Rocketfuel is positioning itself for long-term success.
Coming from the agency trading desk world, I did not partner with Rocketfuel for several reasons:
Rocketfuel works with marketers and agencies on a flat-rate business model, which is aligned with traditional ad network buying.
Beacons have a great deal of disruptive potential as they bridge the digital and physical worlds. I quite like this quote from Steve Cheney, SVP at Estimote: “Beacons as a platform are really a wedge into ‘appifying’ the physical world. They give context to a physical space. They are a way of actually extending the network intelligence to the edge again, something that has been missing since the desktop era. Beacons are truly a way of giving your smartphone eyes—place dumb signs around you and let your phone discover and read them.”
Beacon technology offers new opportunities for marketers across a wide range of industries and verticals. In particular, they enable marketers to:
Engage consumers in their mobile moments via in-app interactions.
Improve the customer experience.
Understand customer behaviors by leveraging analytics.