Display Isn’t Dying — It’s Just Getting Started
ADOTAS – For years now, we’ve been hearing that “display is dying.” Way back in 1965, recent Medal of Freedom honoree Bob Dylan wrote, “He not busy being born is busy dying.” Online display advertising is really, really busy these days – not dying but, yes, being born.
Call it a new generation of display, if you like. Don’t look at this ad channel as some relic that’s irrelevant in an era of tablets, smartphones and whatever else is grabbing the headlines. These three major drivers show how display advertising is just getting started:
1. The continuing discrepancy between consumer usage and ad spending in digital media.
2. An online paradigm shift from direct response to brand advertising.
3. The improving efficiency of online channels.
The discrepancy between consumer usage and ad spending has been narrowing, but there was still as much as a $20 billion gap between online usage and ad spend in 2010, as noted by Mary Meeker of KPCB.
Until balance is achieved in the ratio of media consumption and ad spend, dollars will continue to migrate online — at the expense of other channels. Brands’ ad dollars will always follow the audience.
Display, which includes banner ads, video, sponsorships and rich media, continues to play a major role in the online ad ecosystem. Although we expect a boom for mobile and social in the near future (and I would argue that some of the mobile and social formats should fall under the digital display category), display will also show strong growth during this time.
Display ad revenues grew 15 percent in 2011 over 2010 — from $9.6 billion to $11.1 billion, according to research from the Interactive Advertising Bureau and Pricewaterhouse Coopers. That represented 34.8 percent of overall online ad revenues. Also at a recent eXelate event, Emily Riley of Forrester shared a forecast that the Compounded Annual Growth Rate (CAGR) of display from 2011 to 2016 is expected to be 20 percent, compared to digital overall at 17 percent. We agree with this estimate.
Display’s place in the online ad ecosphere will only continue rising – because of a paradigm shift in the type of ad dollars coming into the online medium, from direct response to brand advertising.
The digital channel, because of its unprecedented capabilities to track consumer response rates, has always been closely connected with direct response dollars, led by search with a 40-45 percent share of spending. But today – thanks to such factors as the ability to deliver ads into brand-safe and premium environments, to accurately predict audience and spending, and to provide brand-related performance metrics – the digital medium is evolving into an effective branding platform.
As brand dollars flow online, their share will dwarf direct response dollars. And the major benefactors will be social and display, whether in the form of standard banners, rich media banners, rising stars, video or mobile. Display’s massive reach, combined with the standardization of creative formats and trading methods, make it the most attractive channel for brand advertisers.
And don’t forget about display’s efficiency. Display’s detailed measurability and razor-sharp targeting capabilities will continue to evolve – including the recent direct correlation with brand metrics. This will result in detailed measurement of their effect on short-term and long-term sales, both online and offline.
Every mass media phenomenon — be it radio, TV, you name it – has had growing pains. The ones that best adapt to environmental changes improve and lead long and fruitful lives.
The digital advertising industry will now be spending more time where it began, where its greatest growth is expected, and where the largest ROI looms: display. Let’s throw out the welcome mat!
article source – Adotas