Digital Advertising Hits the Tipping Point

Posted on 27 April 2014 by JasonK

Back in 2001 I was part of a grand digital futures experiment. Along with 3 others I was part of a small group named “the future” inside of a regular advertising agency and our mission was to explore the future of advertising and in our view that meant digital was only going to get bigger.

The four of us came from different disciplines and we put the existing agency landscape under the microscope. It was the best of the time and the worst of times.

Monkeys on typewriters and dudes on pool tables. That kind of awesomeness.

I loved the agency life syle and being part of the pitch team for a couple of big accounts was exciting beyond anything I had known earlier; having just joined from a IT consulting background.

But the first big thing that I noticed about the agency was that everything was geared back to TV. Yes they had teams working on a range of media including digital but really the money was in TV.

Part of the reason our digital thinking didn’t get much traction then (2001) was simply that the money involved wasn’t significant enough to drive other fees and services.

Fast forward to 2013. This headline US internet ad revenue beats broadcast TV

“For the first time, US internet advertising revenue has surpassed that of broadcast television thanks to sharp growth in mobile and digital video ads.

That’s according to a report from the Interactive Advertising Bureau, which said that internet advertising revenue rose 17 per cent to a record $US42.8 billion in 2013. Broadcast TV ad revenue, in comparison, was $40.1 billion in 2013.”

graph

Here is a PDF of the IAB Online Spend report which includes more detailed graphs from the survey.

Many of us have been waiting for these trend lines to cross over for a while. What accelerated the trends and finally tipped the balance has in fact been the rise of digital video on mobile. So ironically digital ad revenues are being driven by the old media of television.

This is a television that has its second wind and digital delivery means all sorts of changes from content production to distribution and even the way in which TV is consumed.

It is now possible to access an entire TV series and watch the whole thing in a matter of days. That has become a promotional device for some series. But this is television on mobile and so consumption habits are proving to be different from broadcast.

Here are some other implications for TV in this great infographic below.

I believe the latest Netflix numbers are up around 40m subscribers ( including a few million using geo un-blockers) to watch around the world. And Netflix pricing is set to change up a level to improve its profitability.

See also : Netflix vs. Amazon, and the New
Economics of Television

All of which means that in 2001 our team thought that digital was the future. It was but not in the way that we thought it was. TV is still a force to be reckoned with and on demand tv on mobiles and other devices is what has made the key differences.

Note: much faster broadband on the networks and the usual technology improvements along with dropping prices on bandwidth and content has been a big driver.

The Netflix infographic below comes from GreatBusinessSchools It deserves its own post but relevant here as it shows how much TV viewerships are changing and how that has now looped back to the creation process itself.

EconomicsNetflix

 

4 Comments For This Post

  1. Noric Dilanchian Says:

    Hi Jason: As I read it, your central point is “So ironically digital ad revenues are being driven by the old media of television.” Can you make clearer where in your reading you see evidence of that? It seems that a paragraph on that point would strengthen your post.

  2. jasonkemp Says:

    Thanks Noric. There is more detail inside the actual IAB report on the makeup of the spend on digital. And the headline quote mentions – “For the first time, US internet advertising revenue has surpassed that of broadcast television thanks to sharp growth in mobile and digital video ads.”

    It makes sense overall as what is driving internet engagement time is on demand video from multiple sources. Some of that is from traditional channels off websites and some from video apps and some from the new channels of Netflix and Amazon.

    Not sure about Australia but in NZ the 2 big TV channels has a mobile app and if we use that on iPad ( as we often do) then we can’t skip the ads and I suspect this is driving better numbers on ads and ad rates on digital.

    Most of the growth in advertising online is coming from mobile which is being driven hard & fast by the rise of tablets, smartphones and “fablets”.

  3. Noric Dilanchian Says:

    I see. Thank you.

  4. jasonkemp Says:

    I have uploaded a pdf copy of the IAB report as that has the full breakdown. The convenience of mobile means that we are doing more online including watching videos from multiple sources. Having on demand TV has also changed viewing habits and so those with smart TV’s can also watch online video there – all of which accelerates the online / on demand video viewing time and creates a new platform for more advertising.

Advertise Here
Advertise Here

What we do

  • * thinking - & ideas into action
  • * customer alignment
  • * celebrate community
  • * transformational change
  • * product development

Custom Search

Custom Search

Adsense

Archives

Email Notification

Enter your email address:

Delivered by FeedBurner

We like these

SEO Book –

Most Popular Posts