There is a lot of talk at the moment concerning the impact online advertising and video is having on traditional brand marketing. Is online marketing becoming more attractive to brands than the more traditional advertising outlets such as television? Well, TV remains one of the strongest advertising mediums, but a new report shows that for the first time digital advertising revenue has surpassed that of broadcast television revenue in the USA.
Crunching the numbers
According to a study of US advertising revenue by PriceWaterhouseCoopers and IAB, full year internet ad revenues for 2013 totaled $42.8 billion, up 17% from 2012, whereas broadcast television's total ad revenues amounted to only $40.1 billion. Internet advertising revenues have seen a strong upturn over the last year or so, amounting to $12.1 billion in the fourth quarter of 2013. This is an increase of 14% from the previous quarter and a 17% increase from a year earlier.
How has this happened?
There are two main reasons behind this growth in online advertising: the popularity of mobile and the fact that all types of media are now available online. Let's take a closer look at what this means.
The PWC report claims that mobile ad spending saw a 100% increase last year and more of the same is expected in 2014. The ease with which a brand can get advertising access on a mobile platform such as Facebook, and the ever growing use of smartphones are the driving factors behind brands deciding to spend more on mobile.
The growth of online channels for seemingly every type of media is the other main engine of online advertising, as ads can be inserted everywhere. In fact, there are many possibilities, from display ads on websites and e-magazines, to ads on streaming online radio and video. Brands are formulating marketing campaigns that cover all of these bases and this is reflected in the increase in online ad revenues.
The big boys are moving in
Google have not been slow to spot these developments and are now keen to capture the brands that are turning their sights from TV to digital. Their senior vice president and chief business officer Nikesh Arora believes that we are at a significant moment in media marketing where the balance of marketing influence will tip in digital's favor.
Arora points to the use of YouTube by the organizers of this years Super Bowl as evidence of this. The Google owned video site was used by the NFL to upload their TV advertising spots and therefore extend their life. This appears to be a good move as the ads were watched more than 300 million times, three times the size of the audience that originally watched them on television.
Google are putting together a 'preferred offering' to ensure companies such as the NFL and other large organizations use the Google platform for their internet ad campaigns. The advertising package will give companies access to the best content on YouTube and also the resources of Nielson and ComScore to measure the effectiveness of their campaigns. Google say this will provide a higher level of brand safety for the companies who will use it.
With Google planning to attract a slice of ad revenues from previously TV-reliant brands, how long before Facebook, Bing, Twitter and other digital big-hitters get involved? How will this impact on smaller companies looking to invest in internet ads? The next year could be very interesting...