latest Digital Insight Report looks at the US market where online
adspend has surpassed $5bn for the second quarter this year. The continued rate of
growth in the world's largest online ad market is increasingly at the
expense of other traditional media and we expect the coming year to be
the point at which TV advertising budgets are switched online as
advertisers follow their audiences.
Every year we comment on the growth of the online advertising market in
the US, the related restructuring in the media industry, and the key
trends in this segment of the digital networked economy. This email has
the key highlights and you can download the Digital Insight
Report at the end of the links. Let me know if it's useful, and if you'd
like to talk more about what it means, or if you have a comment to add
for one of our discussions, then just mail me back.
Founder and Chief Executive
Digital Strategy Consulting
Insight Report: US advertising market commentary
for the news service
Big changes for world's largest online ad market
Every year we provide our commentary on the growth of the online advertising market in the US, the related restructuring in the media industry, and the key trends in this segment of the digital networked economy. This short Digital Insight Report explores the nature of channel shift and some of the implications for classic media businesses, advertising agencies and marketers trying to navigate the digital economy.
Deciding where to place media spend is becoming more challenging with each new channel, rather than less. The US market remains unassailably the largest in raw online marketing spend, and although some of the models for media planning and measurement in Europe are now pulling ahead, the trends here usually go global.
With the professionally produced content sector founded on the advertising model, the continued leap in web ad spend has much wider implications for the future growth and diversity in online media and entertainment. The US market benefits from the concentration of home-grown talent at Google, Yahoo, eBay, Amazon, MSN and the digital megabrands, combined with economies of scale of being in the largest online audience market.
Since 2000, we have been talking about the digital networked society and the implications for firms as their sectors make the transition. Digital Insight Reports explore patterns within these changes and provide some of the navigation to successfully make the
US online adspend has crossed a record $5bn a quarter for the
second time at $5.2bn
The first nine months of 2007 totalled $15.2bn, nearly 26% up from
the same period in 2006
The world's largest online ad market still enjoying largest annual
growth on real terms
Growth rate still over 25%
Digital Strategy's forecast for the full year is remains at
The growth in online is offset by dramatic changes in the market
share of other channels as budgets are drained from classic media
to fuel digital marketing
Search engine advertising continues to dominate, but all online
formats are growing, with new waves of brand advertising entering
Net breaks $5bn for second quarter running
The latest numbers for the US from PricewaterhouseCoopers (PwC) and
the IAB confirm that the world's largest online ad market is still
enjoying the largest annual growth in real terms. Spend surged ahead
by 25.3%, crossing the $5bn mark for the second quarter in this year.
US Internet advertising revenues for the first nine months of 2007
totalled $15.2 billion, setting yet another new record, an almost 26 %
increase on the same period in of 2006. Spend was $5.2bn in the third
quarter of 2007.
US IAB President Randall Rothenberg noted that "the continued robust
growth of the industry indicates that marketers increasingly
understand and appreciate the benefits of interactive advertising,"
adding that "Marketers large and small have come to accept digital
media as the fulcrum of any marketing strategy."
The growth was propelled not just by search engines (which increased
their share of online adspend to 41%) but also by the wider consumer
advertising sector. Classifieds continued to swell, but they did lose
share within online to the Rich Media and Video formats which now
account for 8% of all online advertising.
Quarterly $ revenue growth comparisons - 2000-2007 year to date
Quarterly $ revenue growth comparisons - 2000-2007 year to
2007 third-quarter revenues at $5.2bn recorded the highest quarterly
revenue total since reporting began in 1996, and marked the second
time in a row that quarterly revenues exceeded $5.0 billion.
Source: PricewaterhouseCoopers / Internet Advertising Bureau
Topline growth hides turmoil
Overall the US ad market is faring well, but as in the UK this
disguises the dramatic churn and channel switching between media that
has made it the most turbulent and unpleasant of times for many media
owners. The US press classified sector continues to suffer the
agonising pain of the CraigsList free-to-air model, the rise of the
Google pay-per-click leads generation model has cut deep, and eBay has
replaced the garage sale market.
As in Europe, the pay for results classified engines such as Oodle
will encroach further into the yields (if not the volumes) of US
regional and local press, while disintermediation is effectively
letting even small advertisers deal direct. As IP-based geotargeting
grows, barriers that have prevented small business advertising from
moving to the web will melt away, strengthening the traditional and
mobile web platforms at the expense of press. The small business
engines within eBay will rise in strength even further, placing Amazon
and eBay in exactly the same space in the US domestic market.
Many consumer brands we spoke to are now talking frankly about
switching campaign budgets to the web as TV's audience reach stumbles
but, worse, perceived ad effectiveness falls even faster. Media
fragmentation, marketing savvy audiences, and massive changes in
consumer behaviour are all impacting faster in the US than most
countries and it's all much faster than most classic media groups can
hope to adapt. This paves the way for polarisation in both corporate
profits and digital audiences. As Digital has been predicting since
2003, when the shake-out comes it will be larger and more brutal than
most classic media (or their shareholders predict).
Industry revenue concentration remains high
Online advertising continues to remain concentrated with the ten
leading ad-selling companies, which accounted for 70 percent of
total revenues in the second quarter of 2007, down slightly from 71
percent reported for the second quarter of 2006.
Companies ranked 11th to 25th accounted for 12 percent of revenues
for the second quarter of 2007, while companies ranked 26th to 50th
accounted for 9 percent in the second quarter of 2007.
Source: PricewaterhouseCoopers / Internet Advertising Bureau
Perspectives and commentary for firms building business in the
digital networked economy
Massive social and technical change demands a new type of blended, connected marketing
It's time for a change in marketing. Many classic marketing channels continue, but a new type of blended, connected marketing is called for.
reading "Massive social and technical change demands a new type of blended, connected marketing" »
Copyright: challenges, models, and getting up to speed with the tensions
Last week in a digital management coaching workshop, a senior marketer hit a familiar legal dilemma: "Can I use things I don't have copyright to?" All I could reply was the rather unhelpful "get a lawyer".
reading "Copyright: challenges, models, and getting up to speed with the tensions" »
Marketing to the Facebook generation: Web 2.0 marketing techniques and approaches
When audiences change, marketing has to change. The problem with marketing through the web is that there's never any let up in the insane pace of change since it kicked off at the start of the nineties, so while most marketers are yet to get up to speed with the last digital era of techniques, you can be sure that a new paradigm is already rippling out from deep in the servers of a website you've never even heard of.
reading "Marketing to the Facebook generation: Web 2.0 marketing techniques and approaches" »
Scattered postings from one person's journey on the road to the
digital networked society
What a wonderful Wi-Fi world it would B (T)
Another tipping point now in sight: this time it's the Wi-Fi clouds we've been craving for. Sitting in a café yesterday without a single unlocked or public Wi-Fi point made me realise how far we still are from actually having ubiquitous wireless access.
Digital publishing strategies pay off
Innovation among classic media got a deserved pat on the back this week at the online publishers' awards. Britain's first online newspaper moved back on top, walking away with consumer publication of the year, after an unprecedented wave of innovation, including the creation of Telegraph Television, a restructured newsroom, complete relocation and a string of new launches.
Google stock: breaking the $600 mark
Another tiny moment in the world's largest digital megabrand. The price of $602.70 in midday trading is up more than seven-fold from the issued price $85 at the float in 2004.
Empty cameras on empty roads
It's so horridly early that this silver Renault Megane is sweeping through almost desolate streets, slipping out of London's Kensington district and onto the arterial roads.
"We're still in the early stages of the transition to the digital networked society. The massive growth in online advertising may have fuelled web media, but the same migration of audiences and advertising is now hurting the classic channels deeply. In this decade of incredible social and technological transition, the major changes are yet to come. Firms who plan to survive transition need to become adept at reading the landscape, and adapt quickly based on what they