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US Ad Spending for 2012

2012 US Ad Spending by Media

From the IAB’s report on US ad spending for 2012. Digital ad spending is up 15% over 2011, with retailers (20%) and financial services (13%) representing the biggest spending sectors.

US Online Advertising 2012 Without Google

It’s interesting, though, to imagine this chart (as I’ve hacked together, above) if you remove one company from it, Google. When you subtract out international revenue and the former Motorola business (see Marketing Land), and you multiply the difference by 96% (the share of Google’s revenues that come from advertising), Google’s US ad revenues for 2012 were nearly $19 billion. Pulling Google out of the mix, US advertisers spent less than $18 billion on internet advertising last year — somewhere between newspapers and radio.

US Internet Ad Spending Nearly $9.3 Billion in Q3 2012

“Internet advertising revenues in the U.S. reached $9.26 billion for the third quarter of 2012, making the quarter the biggest on record, according to the latest IAB Internet Advertising Revenue Report figures released today by the Interactive Advertising Bureau (IAB) and PwC US. These figures show an 18 percent climb year-over-year, in comparison to Q3 2011′s $7.8 billion. In addition, they mark a 6 percent increase over the Q2 2012 figures of $8.72 billion.”

More at IAB.

Federated Media’s CM Summit 2012: ChasNote Round Up

Battelle kicked off the annual Conversational Marketing Summit by interviewing Barry Diller, who delighted the CM Summit’s digital-evangelist crowd with remarks such as “magazines like Newsweek won’t survive another five years as print publications.” Then he summed up the divide between the big media companies and Silicon Valley as follows: “Talking to a TV network exec about tech is like talking to a plumber about bio-physics.” But tech adoption aside, he said, the cable and broadcast networks beat the pants off the internet when it comes to reliably delivering high-quality content, which is one of the chief reasons that advertisers love to spend on TV.

FM’s Joe Frydl presented the Law of Content on the Web: “The value of content on web is directly proportional to number of connections is starts or sustains.” Where digital marketing goes wrong, he said, is that — for all the targeting tools — it doesn’t understand context, and as a result it’s “tone deaf.”

LUMA Partners’s Terence Kawaja blinded the audience with a handful of new LUMAScapes, those logo mosaics that show the complicated ecosystem of startups, agencies, networks and exchanges all fighting for parts of the digital advertising dollar, and proposed a standard OS for online advertising. From Ki Mae Heussner’s post on GigaOM:

While the industry wouldn’t want to quash the innovation, he floated the idea of addressing what he called the ‘rationalization’ issue through standardization. Just like mobile technology has its Android and iOS platforms, Kawaja said, digital advertising could have its own operating system. “Many other industries have benefited greatly by having an operating system, a common platform upon which other companies can build their tools,” he said.

Everyone loves an easy-to-use platform, it seems. By 2015, he forecast, ads bought via real-time bidding platforms (RTB) will represent 25% of all online display spending.

“Too many brands still think writing a big check to Facebook means you have a social strategy,” quipped Mediavest digital chief Amanda Richmond. Meanwhile, on Tuesday, news broke that one of her agency’s biggest clients, GM, has canceled its $10 million ad contract with Facebook, three days before the social network’s IPO. The big-check-to-Facebook strategy isn’t working for GM, apparently. (To which I say, that’s preposterous.)

The industry loves data (“consumer insights are the new black,” she said), and the ability to precisely target consumers based on that data. But while we’ve become good at precision ad delivery, “we also need to know what story to tell them.” We’re falling short on the creative side. (Related: Digiday polls some industry folks, including me, to ruminate on the flaws and virtues of the banner ad.)

And then from Luminate’s Bob Lisbonne (my boss): Welcome to the Imagesphere. In the Kodak Era we took pictures on birthdays and vacations. Now, with a camera in nearly everyone’s pocket there is a whole new dynamic around image content. Ten percent of the photos every taken by humankind were taken in the past 12 months (1000Memories). That’s Phase I of the Kodak-to-Imagephere migration: A massive increase on photo creation. Phase II: New platforms for sharing those images (especially Facebook, Instagram and Tumblr) have turned photos into the universal language for communicating in social media. What’s next? Phase III, Bob argued, will turn those static images into interactive experiences. The popularity of Pinterest, from anonymity to the third largest social network in a few short months, is one example. Luminate’s image apps, which are used by more than 100 million consumers, are another.

Sarah Bernard, social media director for the White House, seemed to support Bob’s theory that images are where it’s at. When asked what she’s learned from using social media for direct democracy, she joked that the best way to engage the citizenry about tax code would be to sneak in some fiscal policy on a photoblog dedicated to Bo the dog.

A few more of my favorite soundbites:

Online Advertisers Spent 23% More in First Half 2011, But They Continue to Want Ads Targeted to Lower-Income Click-Happy Types

According to the latest from the IAB and PricewaterhouseCoopers,

Display-related advertising — which includes banner ads, rich media, digital video and sponsorships — totaled more than $5.5 billion in the first six months of 2011. Display increased 27.1 percent over the same period in 2010, substantially exceeding the previous year’s growth rate of 16 percent. Digital video once again commanded double-digit growth — up 42.1 percent over a year ago, and moved close to the $1 billion mark with $891 million in half year 2011 revenue.

Good news, right? The numbers do paint a rosy picture for “display advertising,” which is often considered the “brand advertising” side of digital. Just because the ad unit is graphical, though, doesn’t mean its intent is brand building. (More of my thoughts on the difference between “graphical ads” and “display advertising” here). When you break down the IAB / PwC data based on the contract structure — whether the advertiser is buying impressions (on a CPM basis) in order to affect brand metrics, or it’s buying clicks (on a CPC basis) to drive transactional or direct-response metrics — you get a different picture. David Kaplan at PaidContent explains it this way:

The latest figures for online ad spending looked pretty good for the first half of the year, but as the Interactive Advertising Bureau’s report shows, even though display is rising, the “premium” impression-based ads still have a long way to go to catch up to performance-based ads, which tend to be of the cheaper, “click here” variety.

This is troubling, and not just for publishers who prefer to get paid for every impression they give away to an advertiser. It’s also bad news for the advertisers. If, through the structure of the contracts they sign, they motivate publishers and ad networks to push ads to people more likely to click on them, they are incentivizing their partners to deliver their ads to end users who are less likely to have disposable income to buy their wares. Those click-happy types (Natural Born Clickers, as they are called in a series of Comscore / Starcom studies) — the 8% of internet users that are responsible for 85% of the clicks on display ads — aren’t the audience that most brands want to reach. They are more likely than the average internet user to make less than $40,000 and to visit gambling and get-a-job sites.

A bad, self-reinforcing cycle appears to be underway. Advertisers demand that publishers and ad nets sell them inventory on a per-click basis — because advertising on the internet doesn’t impact brand metrics among the upscale audience they’re targeting. Meanwhile, to make the economics of those CPC contracts work out, publishers and ad nets are forced to target the lower-income (perhaps unemployed) audience that is more likely to click on banners.

Online Advertisers Spent $26 Billion in 2010

The IAB’s report on 2010 online ad spending published today. Retailers led the charge with 21% of the market, spending $5.5 billion.

2010 Online Ad Spending by Category

Time for me to retire that “Recession” tag?

IAB Annual Leadership Meeting 2011: ChasNote Round-Up

Looking back over my notes, tweets and the #iabalm stream, here are my favorite nuggets from this year’s IAB get-together:

One tweet that captured the 3-day conversation pretty well is Josh Chasin’s: “If advertisers want engagement but digital is selling efficient real time access to cookies — isn’t that a profound disconnect?”

Josh Chasin tweet at IAB

I missed the Sunday night keynote from Google’s Eric Schmidt, but several attendees passed along this quote: “Children these days have two states — sleeping and online.” Hmm, that’s a sad thought.

Coke’s Wendy Clark (about whom my colleague Bob Lisbonne tweeted “Coke isn’t just great at marketing. They’re even impressive at marketing the marketing”) is a marvel. No wonder we collectively drink 1.6 billion servings of Coke every day.

They’re putting up big numbers against their social marketing efforts: Coke has enlisted 23 million Facebook fans (adding another million every 11 days), and those fans are networked to 585 million others — quite a media channel, if it can get those fans to share something nice about Coke. Speaking of media channels, Coke considers Walmart “media” rather than a retailer; with 200 million people walking into their stores each week, it’s got a much bigger audience than American Idol.

Meanwhile, she told marketers to prepare for social-media blowbacks: They will happen, the key is how you respond. Toyota, she said, responded to the recall crisis brilliantly. The only mistake was that they responded too late. She picked this anti-Coke PSA to prove her point:

Pouring on the Pounds PSA

Yup, bad press happens. Spoofs and attacks will come your way. And with this image giant-ly behind her, she offered up the money quote of event: “The truth is irrelevant. Your truth matters. My truth matters. THE truth is irrelevant.” Boom! Did she really say that?!

And I love this. Coke’s creative brief for the bottle in 1960s, according to Clark: “It should be known in the dark.” (Whether or not that’s THE truth, we’ll never know.)

Hulu’s Jason Kilar invited us to imagine a media landscape in which every ad asks us: You don’t like this ad? Click and we’ll give you a different one. Apparently that’s coming soon — replacing the current landscape where you just skip, block or ignore the ads you don’t like. He attributed this stat to Mary Meeker: For every person using the Internet, advertisers are spending $46 in online ads. Hulu, meanwhile, made $263 million last year on an audience of 30 million — $8.77 per unique. Come on, advertising people, let’s give Hulu its fair share!

He also broke down the money supporting the TV business. Forty-one percent comes from ads, 28% transactions and 31% subscription products. I need to look a little deeper into that one…. First I want to understand what “transactions” are. Per-inquiry TV spots for direct-response marketers? Set-top boxes? I also want know what he’s counting in the “TV business.” Just TV networks, or are the cable operators in there too?

Microsoft’s Rik Van der Kooi says Coke’s 23 million Facebook fans are an opportunity for what his team calls Relationship Impressions. If Dumb Impressions are worth 1x and Targeted Impressions based on cookie data are worth 4x, Relationship Impressions will be worth 10x. Sure, I buy that.

Rubicon Project’s Kara Weber points out, though, that Van der Kooi’s “Relationship Impressions” sound a lot like moments of engagement that Coke calls “Expressions.” You get the sense that Coke marketers have spent a lot more time with real, live human beings than the crew at Microsoft has. And if the goal is connecting with people, that experience (and choice of words) matters.

Cluetrain Manifesto author Doc Searles says “Obsessing about privacy is not productive.” Some new innovation will get us past the current hairball. He points to Foursquare check-ins as a possible new paradigm, replacing data-tracking cookies will opt-in sharing of personal data. (Or perhaps 600 million of us will tell our deepest darkest secrets to Facebook.)

Deep Focus’s Ian Schafer: Automation will further commoditize inventory unless targeting compensates for it. (I think automated targeting might do its own commoditizing, though.)

In unveiling the IAB’s new ad formats, Cadreon’s Quentin George said: “Reach-and-frequency is the penalty for bad advertising.” Aparently we have been very, very bad.

My take on the new formats: They’re bigger. One, the Filmstrip from Microsoft, is a 300×3000-pixel scrolling unit that fits into a 300×600 placement. I’m wondering how often someone makes her way all the way down to pixel 3000. Another, the Sidekick from Unicast, starts as a skyscraper-like unit and then expands into something that fills the gutters to the left and right of the content, and launches a video player on top of the content.

GigaOM’s Om Malik tweets: “I wonder if making bigger ad sizes is really the answer.” (To which I replied: “Totally agree, Om. If the creative stinks, bigger ads just make them stinkier.”) My reaction to new IAB formats is the same as my reaction to TV or print ad formats: When I like the brand and creative, I love the format. If I don’t, the format fails. But when you think about it, that’s real progress among banner ads.

Online Advertising Is Creepy

A PSA from the Interactive Advertising Bureau.