DMN3 Blog

It’s no secret that online advertising will continue to see strong growth in 2011 just as it has in the last year. The question is, what kind of online advertising will grow and why…

Advertising budgets continue to recover from the economic downturn with full recovery expected to occur late this year or early in 2012 according to analysts at Zenith Optimedia. Total ad spending in the U.S. is projected to be 214.3 billion dollars in 2011. They anticipate that online advertising revenue will account for 15 percent of that total.

Deutsche Bank Securities recently published their Media Buyers Survey that presents their outlook for the U.S. online advertising market from an investment perspective. They surveyed 31 buyers who control over five billion dollars in online advertising spending.

The Deutsche Bank analysts anticipate a double digit increase in U.S. online advertising expenditures over the next five years. They are projecting an 11 percent increase in 2011 for online advertising with total spending expected to hit 28.5 billion dollars in 2011. This follows a 14 percent growth in 2010 ($25.7 billion). They project that the U.S. online ad market will reach approximately 41 billion dollars by 2015.

Different segments of online advertising will grow at different rates. Search ad spending and display ads represent the fastest growing segments of the industry. It should be noted that these segments include mobile search and display as part of the overall segment. Mobile is expected to grow at a much faster rate than desktop in these segments. Mobile along with social media and group purchasing sites will support this growth.

A lot of this growth will come at the expense of classified online ads as well as traditional advertising media, especially print. Even as display and search continue to grow, they are projected to lose their share of online advertising dollars to other fast emerging segments including mobile, social and online video ads. Buyers are diverting display advertising dollars to online video advertising making it the biggest gainer in 2011.

Mobile advertising expenditures are expected to represent approximately 5 to 7 percent of online ad budgets in 2011. Mobile advertising is expected to exceed the billion dollar level in 2011.

Bizo, a digital solution provider recently surveyed leading marketers from businesses and advertising agencies in March of 2011. They asked each of the 130 respondents to rank their top three priorities for online marketing strategies for the next 18 months and the benefits as they see them. For this survey, display and mobile were considered as different advertising segments.

Display was ranked as most important (67%), followed by Mobile (59%), Paid Search/SEO (55%), Social Media (48%) and Email (31%).

Ninety percent of respondents indicated that display ads were as important or more important in their marketing mix than last year. It should be noted that this result is counter to many other surveys indicating that display ads are losing share to mobile, social and online video advertising.

Approximately half indicated that they will spend more on display ads this year which is consistent with other surveys.

Among respondents who increased display advertising in 2010, the three largest benefits cited were:

• Increased website traffic (55%)
• Increased conversions or taking desired actions (46%)
• Increase in qualified leads (42%)

The biggest challenge identified by this and many other studies continues to be the ability to measure the effectiveness of online marketing efforts. Online data analytics remains an important area of focus for all digital marketers as they increase spending in all segments of online advertising.

Editorial Comment: As a marketing research professional, I’m skeptical of surveys undertaken by companies where the results reinforce the product line of that company. Often either the survey sample population or the survey questions are biased and those of us who report on the results neglect those potential biases. I often see the results reported as if they were conducted under a research protocol with a random population and unbiased questions.

It’s not that the results are often meaningful. It’s just that we need to understand the potential bias as we examine the results.

One way to avoid such pitfalls is to see how the results are reflected in other polls on the subject. When a number of different surveys all agree on a result, we can have a lot more confidence in the result.

Enough said. A word to the wise is sufficient.