Bright Future of Online Advertising says eMarketer

eMarketer released a report today that will bring a collective smile to the online advertising industry. The report, which benchmarks its US online ad spending projections against data from the Interactive Advertising Bureau and PricewaterhouseCoopers, predicts that online advertising spend in the US will reach $31.3 billion this year, a 20.2% increase over 2010 spending. More so, according to this eMarketer article, nearly $50 billion will be spent on online ads by 2015.

 “The internet has become as fundamental as television to advertisers,” said eMarketer principal analyst David Hallerman. “As consumers continue to increase their time spent online and as a resurgent economy continues to bolster ad budgets, we’re going to continue to see an influx of dollars toward the internet. More ad formats, such as video, and more channels, especially social media and mobile, are also key contributors to the spending gains.”

Thoughts from our CEO, Mike Seiman:

This past weekend, I had the pleasure of attending the DC Summit Series, an amazing gathering of some of the youngest and brightest entrepreneurs to ever grace this world.  While there, I had the pleasure of hearing a futurist named Ray Kurzweil speak about the evolution of technology and where it will go in the future.  He explained the phenomenon of how technology generally starts off linear, and moves into an exponential phase, where it grows at a rate faster than people can generally keep up with.  I thought about this concept long and hard, and decided that it could be related to advertising in general. So, I did a little research and here is what I’ve come up with (this is in no way a complete history of advertising, just a few key points to explain my rationale):

1704 – First Newspaper Advertisement Placed

1742 – First Magazine Ads

1843 – First Advertising Agency

1882 – Proctor and Gamble Start Advertising

1917 – First Agency Trade Association Developed

1929 – $12 Million Spent Advertising Lucky Strikes

1939 – TV’s First Baseball Game Aired

1954 – CBS Becomes Largest Advertising Medium in World

1976 – The Supreme Court grants advertising First Amendment protection.

1980 – Ted Turner creates CNN

1986 – Needham Harper Worldwide, BBDO International, and Doyle Dane Bernbach merge to create Omnicom Group, the largest advertising company in the world

1988 – WPP acquires the Ogilvy Group for $864 million, the highest price paid for an agency

1993 – The Internet becomes a reality as 5 million users worldwide get online

1997 – WPP combines the media operations of JWT and O&M to form The Alliance, the largest U.S. media buyer with more than $2 billion

1999 – Internet advertising breaks the $2 billion mark and heads toward $3 billion as the industry, under prodding from Procter & Gamble, moves to standardize all facets of the industry

Okay, so now you can start to see how advertising and mediums for advertising started in a linear fashion.  I haven’t added anything from 2000 on, because that’s when it just starts to get crazy, and the exponential growth goes wild.  Think about how long it took for advertising and agencies to start moving when magazines or TV first started accepting advertising, and look at how short a period it took for online advertising to explode after the Internet was embraced by millions.

Now, the choices are endless, between TV, Print, Online, and Mobile, then it breaks down to Video, Display, Search, Wap, Mobile Apps, In Game, Virtual Currencies, and on and on it goes.  Mix that in with all the choices today for managing your ads, ad servers, crms, optimization, transparency tools, online exchanges, supply side and demand side platforms, ad networks, and who knows what’s next to come.  I guess the overarching point of all this, is that the landscape of advertising is in such a rapid state of change that agencies and advertisers can no longer expect to be able to do it all, they need to start relying on companies that understand the ever-changing landscape to help get their clients’ messages out to the world.

So, I propose the new ad network is one company that can do just that, and at CPX we plan to make sure we understand every inch of the landscape, to provide our clients with the most sophisticated capabilities on the market every second. I could sit here and write a book about this concept and really dig into every last date to show the real exponential growth, but I have way too much work to do, and writing books is not my forte… but, who knows, maybe one day I will.

Last year, US online ad spending faced the first decrease since 2002. But, industry experts predict that these numbers will rebound in 2o10, as the economy becomes more stable.

Despite the decrease in online advertising spending in the US in 2009, online advertising still continued to grow as a percent of total ad spending. This trend is predicted to continue into the foreseeable future.

In his article Online Ads Not Working for You? Blame the Creative, Kunur Patel discusses a study that finds that ad placement may be less important than design when it comes to making the big impact that advertisers want. We agree completely.

CPX has been developing conversion-oriented creatives for clients for years. We regularly find that creatives we develop for advertisers have significantly higher click-thru and conversion rates than creatives they have run in the past. While online delivery is focused on numbers, metrics and technology, it is important to remember that there are still underlying principles of advertising that apply.

Among Patel’s suggestions: Highlight the brand throughout the ad, Make each second count, and Stay simple.

Read more here.

The effects of the recession have been felt in every industry, including online advertising.  But, eMarketer predicts a light at the end of the tunnel, forecasting a gradual rise in US online advertising spending beginning next year.

A recent comScore study found that the number of people who click on display ads has fallen to 16%. These findings have created quite a buzz around the online advertising industry, including calls for online marketers to find a better measure of success than click-through rates.

The release of this study is no surprise to CPX Interactive.  In fact, our most recent ad campaign (which can be seen on the pages of OMMA, AdAge and Media magazines (and below)) highlights our belief that every client may have a unique  success metric.  While the most commonly thought of metrics may be CPM and CPC, the truth is that, depending on the campaign, an advertiser may choose to judge success by less measureable metrics like user engagement and brand exposure. It is, therefore, no coincidence that the “x” in CPX represents a dynamic variable. As far as we’re concerned, your metric is the ONLY X!

Samantha Karol, Sr. Marketing Assistant

In July, we wrote a post about the benefits of behavioral targeting, despite the negative connotations of the word “tracking.” That post was sparked by an article published by AdAge called, “Tracking Makes Life Easier for Consumers.” Although the advertising industry recognizes the need for regulation of Web tracking, they believe self-regulation would be better than legislation.

Major industry groups, including the Interactive Advertising Bureau, American Association of Advertising Agencies, Association of National Advertisers, Direct Marketing Association and Council of Better Business Bureaus, are putting their heads together to determine the best method for improving self-regulation.  However, there are a number of privacy and consumer advocacy groups who are in favor of legislation, and they have already come together to write a proposal.

For more information on both sides of this issue, and the growing pressure for some sort of regulation on Web tracking, check out this article published this week by AdWeek.

According to this survey, ads on mail and instant messaging sites are catching the attention of Internet users, and keeping it the longest. On the other end of the spectrum, ads on social networks and homepages are holding people’s attention for less than half a minute.

A study of online display ad campaigns found that smaller ads, “half banners” (234 x 60) and rectangles (180 x 150), were more effective than larger ads like leaderboards and skyscrapers. Close to 2,400 campaigns from the past three years were included in the study, which was conducted by researcher Dynamic Logic. Read more about the findings on MediaPost.

People from around the world have greater trust in online advertising now than in the past. Although, there is still room to grow, the worldwide attitude towards online advertising has improved.

For more, read What Advertising Do Consumers Trust? from eMarketer.