Wednesday, April 7, 2010
New US Online Ad Spending Data: No Surprise & Some Surprises
The Interactive Advertising Bureau and PricewaterhouseCoopers released their full-year US online ad spending report for 2009 this morning. The IAB/PwC historical data is our benchmark for Internet ad spending projections, so these new numbers certainly got our attention.
To summarize our initial reaction: Not too surprising, and yet fairly surprising.
The bottom-line number of $22.66 billion is more or less the same as eMarketer’s projection of $22.37 billion from last December. The growth rates also pretty much match up, with the IAB/PwC saying spending declined by 3.4% in 2009 vs. eMarketer’s previous estimate of a 4.6% drop.
Search remains the main driver for online ad spending, with 47.2% of the total dollars, followed by banner advertising, which got 22.3% of that $22.66 billion sum.
However three data points were somewhat unexpected:
- Growth for banner ads in 2009 was relatively strong (up 3.8% vs. our last projection of a 2.3% fall). That greater strength than expected points to two key factors about banner ads today: One, how brand marketers are still looking for good online ad entry vehicles; and two, how the plethora of potential ad pages—driven by the huge usage of social media sites—means banner ad inventory is up even as overall pricing is down.
- Banner ad spending increased 3.8%, surpassing a 1.4% gain for search ad spending. That marks the first year since 2006 that the banner growth rate was higher than that of search. Look at it this way: Search is a mature market. Google’s increased focus on display ad dollars is one way to understand those comparative spending increases.
- More new dollars went into banner ads than search ads: A $184 million gain for banners vs. “only” $152 million more for search. Again, brand marketers are seeking their audiences, since those audiences are spending more time online. Further, more new dollars went into video ads than any other format ($283 million), but that’s not a surprise.
Definitely more to come. For now, take a peek at the full IAB/PwC report (pdf).
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The fact that Display ad spending increased more than Search on YoY growth % was a little surprising to me, especially with the rate of funds shifting away from traditional media and onto the Internet with search usually preceding display advertising due to ROI drivers.
Search inventory, by its very nature, is finite whereas Display inventory continues to grow with the proliferation of user generated content, so it is possible that big national brands are taking advantage of the current buyers market in Display, with declining CPMs and greater inventory availability. New behavioral targeting options in Display may also be contributing to the growth.
Another driver to consider if the “Facebook Phenomena” where Facebook is rivaling Google for the top honors for #1 US Internet destination. They are the new MySpace of performance Display advertising. 400 million users sharing 5 billion pieces of content per week could be part of the reason.
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