US online advertising – classified and vertical big winners.

The credit crunch inthe states might have marketers tightening budgets, but online advertising is forecast to continue to grow. Online classified advertising and vertical platform distribution is set to grow by 24% in the next 4 years.

A report published by the Kelsey Group forecasts that US classified advertising will increase from $3.9 billion to $14.7 billion. Vertical advertising, for the same period is forecast to grow from $100 million to $456 billion… can those figures be correct?

It’s a movement from Web2.0; anyone can publish and connect, to Web3.0; the resurgence of the expert and the niche in response to the shoutyness and noise in the ether. As internet users get more sophisticated and more demanding, it makes sense that goal oriented activity will increasingly take place within relevant platforms.

Neuromarketing

MRI is being used as an additional research armoury for marketers. Jack Daniels commissioned research on brain stimulation on images as part of their ad creation. So while digital marketers get fired up about the possibilities of behaviour and psychographic search across loose networks of sites (Openx, Google Admanager), marketing is already paving the way for plugged in neuromarketing. Yikes! Guardian Technology Article by Nick Carr

Granted triggering firing synapses while the subject is encased in an MRI machine might be a large step from the measurement of purchase intent, but it does put into a different context the controversy being kicked up about BT, TalkTalk, Virgin chats with Phorm and it’s ISP based user behavioural tracking. Guardian Technology Article by Charles Arthur

On the one hand we have marketers potentially being able to map reactions at a cellular level and on the other planting of cookies across general net surfing.

Online advertising spend continues to increase

Online advertising spend is predicted to increase to £3.4 billion by the end of 2008, a 30.8% increase. Not only that but the UK will be the first major global economy where internet advertising will enjoy a higher spend than TV advertising (2009), a trend we’re going to see in Sweden this year.

And yet we’re seeing click through rates for banners and traditional online advertising continue to decrease. Reported average rates from 1 click for every 500 impressions or a CTR of 0.2%.

So why are marketers putting their money increasingly with online advertising. The answer is probably three fold.

1. Online Advertising as Branding

From one angle there seems to be an increasing shift from internet advertising being seen as an extension of Direct Response and moving more towards branding. As in traditional media where advertising expanded from back page ads for products to outdoor campaigns, so online advertising is seeing a move from the ad required to give an immediate response to those which are more about the positioning and the brand. With comments from media buyers and broadcasters indicate that a decline in TV advertising on between 7-10% -depending on who you’re reading (the advertising Association forecast in increase of 0.8% but I suppose they would)- it’ll be interesting to see if online brand advertising spend, especially in a slow down, takes a share of TV spend or whether it will continue to take from DM budgets.

2. Success rates of new advertising formats.

The launch of iPlayer, the recent announcement by T-Mobile and Yahoo for the delivery of banner ads, Ingame advertising; a lot has happened in the last 12 months. Video advertising is perhaps the biggest success story so far delivering CTR of 1%-2% i.e. the same levels that were enjoyed by banner advertising at the turn of the century. Embedded advertising, as applied by YouTube is having a greater success rate than banner and button advertisements.

Mix this with the branding argument above and we are seeing that video ads are increasingly being used for brand awareness, message association, and advertising awareness with user purchase intention increasing by a whopping 50% after viewing video advertising.

3. Better Inventory control

Behavioural and contextual advertising, while not quite meeting the promise trumpeted by the large content platforms such as Yahoo! and MSN, has allowed advertisers and their agencies to incorporate more sophisticated online media planning. Being able to target user on their profile, their behaviour and the content they are accessing is a pretty powerful ideal. Psychographic profiling really has huge potential for online advertisers. Online advertising can now pay more than lip service to the buyer decision making cycle.

What is really exciting is that online measurement is going to be multi dimensional with the nitty-gritty of CPC, CTR and the like being joined with the more esoteric psychometric measurements of branding.

OpenX Advertising vs Google Ad Manager

OpenX has been around for a while but as it says on it’s home page, Google’s release of Ad Manager endorses it’s model. The difference is that OpenX is a free ad platform for 30,000 sites (serving a few billion ads a month). It’s also looking at tracking user IDs across it#s network and releasing a bidding structure for buying inventory across it’s network of sites. 

Openx features and benefits

It’s a move from impressions towards better understanding influence and online realisation.

The benefit to us digital marketers is that not only will it provide more flexibility in rolling out ad campaigns for our clients, presumably lowering wastage and increasing ROI, it also heralds a new type of analytics, that will focus on user intent as a major metric not the more common build enough inventory at an audience and some of them will come, fingers crossed.

Google Ad Manager… just think about it..

Okay, so I mentioned Google Ad Manager before, but you know it really deserves another look. This is potentially a revolutionary change in online media buying (what another one?). Effectively what Google is doing is opening up the doors for loose networks for display type advertising on properties that they don’t own. This is so unlike the more traditional method of audience building through acquisition or creation of own portals (AOL buying Bebo, MSN trying to buy Yahoo!, Yahoo!’s investment in portal content..). it’s also contrary to the big moves over the last 18 months towards psychographic  (behavioural with aspirations) ad serving across controlled networks (MSN and Yahoo!).

Google has again stolen a march on the marketing industry. Why hadn’t we thought of that.  (doh!) Google has already transformed analytics with the launch of GA last year, now they will be able to collate behavioural informaiton across multiple non-owned sites with the potential of selling ad space across a huge network of both niched (great for goal oriented web users) and community based sites (great from brand).

With the Double Click green light and this service being tagged onto the Adsense network which is already trusted by advertisers, this move is a bit of a marketing wow for the boys in Palo Alto.

From peanut butter to jelly

Is it a clever strategy to get Microsoft to up it’s non-solicited bid, or do the decision-makers in Yahoo! really believe that they will be able to double it’s cash generation ($1.9 – $3.7 billion) over three years. Yahoo! might have brand and scope but it’s share of global search has been seriously eroded by the goliath Google.

Underpinning the predicted growth are the staples of online; search, email and mobile albeit with an increased social slant. Advertising is also key and the hopes are that the release of Panama last year will result in an additional $1.4 in search advertising (reflecting market growth) over the next 3 years. Yahoo! expect an additional $1.9 billion from display and video search (ahead of market forecasts).

With the infamous peanut butter manifesto leaked at the end of 2006, there was a focus on the use of API’s to increase Yahoo!’s sphere of content influence while remaining at the heart of the web. Now it seems that Yahoo! is focusing on some advertising jelly to sweeten it’s future.

Vital Yahoo! Stats:

  • 305 million unique monthly users to homepage
  • 262 million unique monthly users of their mail

Google and accessible digital marketing

Almost a year on, but Google can finally go ahead with the Doubleclick acquisition. You’ll remember that both Yahoo! and MSN argued that the purchase was anti competitive. Europe has ruled in favour of Google who has always maintained that display advertising DoubleClick was complimented but Google’s text ads.

On another note, Google has launched Google Ad Manager , a stripped back, easy to use ad server for publishers. From a digital marketing point of view, Google can only be applauded for their release of products which allow even the most neophytic online marketer access to tools that will help increase their effectiveness. In the last year or so Google Analytics with it’s joined up tracking, Ad Sense and AdWords interface changes, the expansion of webmaster tools, Google sites and docs has had a really positive affect on how site owners view digital marketing, making things less confusing, more transparent and reducing the barriers to marketing success for many smaller companies.