Despite growing fears about the economy and the impact on ad spending in general during the past several months, online ad dollars jumped 23.2 percent to a yet another record $14.9 billion in the first half of 2011, according to figures released today by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC US).
While online is widely expected to be growing anywhere from 16 percent to over 20 percent, there had been a good reason to expect that growth rates would start to slow a little bit this year. But those fears so far seem unfounded — at least until the end of June 2011, which was still a period of considerable hope that the economy was improving.
Furthermore, the rise is notable, if only because last year represented such a strong comeback for the ad market. The rate of growth for h12011 more than doubled year-over-year, as last year’s first-half ad revenues of $12.1 billion had represented an 11.3 percent increase over 2009.
Things were even a little better for Q2 by itself, as internet ad spending increased 24.1 percent to $7.7 billion. There was That performance compares to last year’s same-period revenues of $6.2 billion, up 13.9 percent from 2009.
The other big story this year has been the robust comeback of display ads. The latest numbers suggest that brand dollars, as opposed to cheaper direct response spending, which generally describes most internet ad placements, is gradually catching on as marketers shift their budgets from traditional at a faster rate. But that picture remains uncertain, as performance-based ads are still dominant versus ones that are intended to drive awareness.
The display category, which encompasses banner ads, rich media, digital video and sponsorships, totaled more than $5.5 billion in h12011. Some of the specific findings the IAB found during the first six months of the year:
– Display rose 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.
– Display accounted for 37 percent of all interactive spend in the first half of 2011.
Search is still the leading online category with a 49 percent share of the total – nearly $7.3 billion. Search and Display each grew about 27 percent year-over-year, with Search more than doubling its previous year’s growth rate of 11.6 percent.
In other online ad formats, dollars spent on lead generation grew 25.4 percent over the same period in 2010, but classified ad dollars were down 2 percent. In contrast to all the other numbers, e-mail advertising, never much of an exciting area for marketers, plummeted 34.2 percent.
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.
Display accounted for 37 percent of all interactive spend in the first half of 2011, with search remaining the leading online category at 49 percent of the total – nearly $7.3 billion. Search and Display each grew about 27 percent year-over-year, with Search more than doubling its previous year’s growth rate of 11.6 percent.
In other online ad formats, dollars spent on lead generation increased 25.4 percent over the same period in 2010, but classified ad dollars were down 2 percent and email spend decreased 34.2 percent.
For the most part, the issue of whether display can become a true branding medium, like TV or print, the numbers made that balance seem a bit murky. Specifically, ads using performance-based models increased faster than ads using impression-based models, rising to $9.6 billion. Impression-based ad spend did grow by 10.8 percent, though that pricing model accounted for only 31 percent of total ads, down from 35 percent year-over-year.
In other words, the metrics most used in brand dollars are growing, but the share is still tilted towards ads that are tied to driving a click or some other action other than general “awareness.”
And there were some dark spots amid all the cheer. For example, Consumer Packaged Goods represented 6 percent in 2011, or $866 million, down from $980 million (8 percent) for the same period last year.
CPG, which is considered a bellwether brand advertiser, is still struggling to come up with all the metrics from the online world and fit that data into the models they’ve been using for the past 50 years, said Sherrill Mane, SVP Industry Services at IAB, during the IAB’s conference call. “That ad category, above all others, is more resistant than other categories to using new methods of justifying marketing spending. But we’re working with those marketers to give them the proper tools.”
When asked about what the dominance of performance-based ads versus impression-based ads, which are all about how many “eyeballs” may have been exposed to the placement, Mane said it reflects the nature of the internet in comparison to other media. For example, no one expects a magazine reader or a TV viewer to immediately purchase a new phone or pair of shoes the second they see an ad; no one expects a Lowe’s to get a call about where they’re located after a TV spot.
But with online ads, there is an expectation that users will do “something” when they see an ad, simply because they can. “There are abundant ways that users use interactive media,” Mane said. “You’re beginning to see hybrid revenue models have increasing, say an ad that is both CPM-based and action-based. Independently, everyone is looking at what the IAB calls “brand performance,” which looks at other ways brands of driving engagement.”