The IAB have recently released their online adspend report for 2010 and It makes for some encouraging reading if you work in the digital world. In a nutshell, online advertising spend is up, and a big chunk of it has come from an increase in Display Advertising.
In 2009 online spend represented 23% of overall marketing spend and last year that’s moved up to 25%. All areas have grown on the previous year, search up 8.0% and classifieds up 9.7% but display was the largest by some distance, growing 27.5%.
So what caused the boom in display? A big boost from social media platforms has certainly had an impact. There has been 200% growth in display ads on social networks (mainly Facebook) in the last year, and Facebook now accounts for 5% of all online spend. The report also tells us that the use of video in Display advertising has also jumped up, going from £28m in 2009 to £54m last year.
So why the big increase? Why has display seen a much bigger increase in the last 12 months compared to other digital channels?
The world of display is going through some changes at the moment. More and more brands are looking for dynamic and creative ads that engage with the audience, beyond standard creative ads. This is not to say that traditional display ads are not working anymore, they of course have their place and continue to be an extremely effective channel for both direct response campaigns and building brand recognition.
The increase in video spend suggests that brands are heading down the rich media road, but running a rich media campaigns doesn’t come cheap, and are often best used as a brand building exercise as opposed to direct response which can often have clients questioning the return of their investment.
Another reason is through the growth of DSP’s. Demand Side Platforms use technology to manage impression bids in real time which help serve more relevant ads to consumers at a much more cost effective rate for the advertiser. It’s generally win-win when managed appropriately, so it’s easy to see why DSP’s are growing and becoming increasing used in display campaigns.
The biggest influence however seems to have come from social media, and in particular Facebook. Facebook has opened up the possibilities for advertisers, both big and small. Larger brands are able to plough big bucks into Facebook and run really effective brand engagement campaigns, and at the same time Facebook is also providing a platform for smaller companies to build up their online presence. Traditionally smaller brands wouldn’t have had the budget to run an online display campaign, but Facebook allows them to advertise online with a very small budget, to a well defined target audience, opening up the online market for many who would have considered Display something of a pipedream.
Facebook is still predicted to grow, and maintain its position as the number 1 display platform. The growth of Facebook will help brands, big and small, using display to reach targeted audience, and with the EU cookie direct coming into force in May and having a big impact on display advertising. It looks like it could become an even more attractive option for advertisers as Facebook uses your profile information to serve you ads, not dropping Cookies which is the hot topic at the moment.
One restriction of the report however is that the IAB’s figures for Display growth also include all Affiliate Marketing activity, a huge channel in its own right (we think it shouldnt be classed as display actually but that’s where it sits for now!). The affiliate industry has also seen some really encouraging growth in the past few years, with the 2010 figure estimated at over £4.26 billion, up 12% from 2009 (Econsultancy, 2011), and continues to be an extremely rewarding channel. Hopefully in the next report we’ll see affiliate marketing split out from display advertising in it’s own category.
So display is growing quite nicely, but it still has some way to go if it wants to catch up with the likes of SEO and PPC. Facebook is the main driver behind this, and in the process, they’re helping open up the more and more businesses to display advertising and the benefits that it can bring.
Thanks to Paul McKenna for his contribution to this post.