Advertising Market Predictions Through 2021

Every year, Price Waterhouse releases their Entertainment & Media Outlook report with advertising market predictions through 2021.

Since last year’s report, online advertising has overtaken television by about $15 billion. By 2021, the online advertising market is estimated to be 50% larger than TV and has a compound annual growth rate (CAGR) of 9.9%.

Mobile has the largest share of online ad spend and accounts for 71% of all internet consumption, as reported by Digiday. Fueled by social video, “mobile advertising is projected to grow by an annual average of 18.7% from 2016 through 2021”.  

Television advertising spend is growing slowly and is expected to reach 38.8% share of the market in 2021. Its low CAGR of 1.3% is due in part to declining viewership, a trend driven by younger demographics. Marketing Charts reports that this decline is not only due to cord-cutting but also the fact that 18-24 year olds are watching less traditional television.

With both the magazine and radio markets remaining flat, the only market expected to see a decline in revenues by 2021 is newspaper advertising. Despite loyal readership, the newspaper market revenues are expected to drop by $4.6 billion between 2017 and 2021. 

Most Improved Brands Among Millennials

In the results of a recent survey released by the public-perception research firm, YouGov BrandIndex, millennials reveal which brands were the most successful in gaining their patronage. Although some of the brands are not so surprising, others, including brands considered to be traditional, stand out from the list.

The rise of the sharing economy puts Uber at the top of the list, despite public relations woes plaguing the company. Chase also occupies the list at No. 13, prompting Ted Marzilli, CEO of YouGov BrandIndex, to say, “ethics are good, but price and convenience carry the day”.

Traditional brands can also be found in the top 20. The presence of Puma, Delta Airlines, Visa, Adidas, and Ace Hardware show the value millennials place in adaptability. However, it’s important to realize why these brands make the list. These “graybeards” so to speak, aren’t popular for their nostalgia but rather for their ability to stay relevant and adapt to current times.

Another head scratcher on the list is number five, TLC, which dates back to the 1970’s. However, the network has gone through several facelifts to evolve from an education-oriented channel to a source of entertainment filled with Honey Boo Boo and shows like, “My Fat Saved My Life”. 

Reaching Communities Through Mobile Advertising

The Cannes Lions Festival of Creativity had the who’s who in advertising and communications flocking to France last week. The festival presented an opportunity for marketers to share insights and new innovations as participants waited to hear who would be awarded a prestigious Lion award.

Facebook’s COO, Sheryl Sandberg, and Airbnb’s CMO, Jonathan Mildenhall, presented on the growth of global communities and how marketers can reach them through mobile advertising.

The trend in marketing has been to move away from selling a product or service and instead connect the consumer with a community. Airbnb especially relies on the idea of community as it utilizes technology to connect people in real life. “Without our community there is no Airbnb, there is no brand,” says Mildenhall.

To effectively reach these communities, Sandberg says brands need to create attention-grabbing native mobile ads with “thumb-stopping creative”. With Facebook and Instagram, advertisers are able to test an ad’s performance while maintaining the ability to change out creative if the desired results are not achieved.

Noteworthy campaigns often combine multiple mobile elements. The “New Year, New Roads” campaign for Chevy used video and chatbot among other platforms to connect with consumers.  

Airbnb has seen significant benefits to investing in its own community with user-generated content receiving six times more engagement than advertising video on social media.

“At the end of the day,” says Sandberg, “this (ad) community’s job is to drive our businesses. Explain our purpose, but also drive sales.”  

What Verizon’s Acquisition of Yahoo Means for Marketers

For marketers looking to expand beyond Google and Facebook, Verizon’s new subsidiary, Oath, will offer improved targeting and measurement. Through its merging of Yahoo and AOL, Oath will benefit from the advertising capabilities of both companies as well as Verizon’s subscriber data.

The focus on content brands, such as HuffPost and Tumblr, will set Oath apart in the digital advertising space. These content brands will soon be “automatically available on the ‘decktop’ of Verizon subscribers’ phones”.

Oath plans to focus its growth beyond the United States by targeting key markets and possibly acquiring more companies. Tim Armstrong, CEO of AOL, stated the goal is for Oath to double its consumer base by 2020.

Verizon bought AOL in 2015 for $4.4 billion and recently acquired Yahoo for $4.5 billion. eMarketer estimated Verizon and Yahoo will generate a combined $4.7 billion in digital ad revenue this year.

News coverage around Verizon’s acquisition of Yahoo has focused primarily on the resignation of Marissa Mayer as well as Yahoo’s plans to lay off 2,100 workers. The Wall Street Journal reports that most of the job cuts will occur where there are duplicate roles and teams.

From the marketing perspective, however, Oath represents an opportunity for digital advertising to grow. 

Header Bidding: The Trendy Programmatic Technique

Most digital advertisers have been familiar with programmatic selling for a while but may just now be hearing of header bidding. As the newest trend in programmatic, header bidding has the potential to help both advertisers and publishers.

According to Digiday, header bidding is a technique which allows for multiple bids on the same inventory. This increases the yield for publishers and provides more data points for advertisers.

According to Technorati CEO, Shanie Higgins, “the entire idea of this system is to eliminate the need for pushing inventory back and forth, which is inefficient and wasteful”. While header bidding does help to streamline the programmatic process, it comes with a significant drawback.

By adding yet another SSP tag to their page, a publisher risks raising their page load times. Page latency has helped fuel the popularity of ad blockers in recent years.

While the header bidding technique is not perfect, publishers greatly benefit from the increased transparency and revenue. With programmatic ad spend estimated to reach $37.9 billion by 2018, the chance of more revenue is worth the risk and inconvenience for many publishers.

In response to the recent popularity of header bidding, Google has released exchange bidding in Dynamic Allocation for publisher testing. According to The Programmatic Publisher, Facebook’s Audience Network has also integrated with tech partners for header bidding. 

Key Takeaways from the Internet Trends Report

From YouTube’s decreasing share of mobile traffic to the personalization of voice-activated devices, the newly released Internet Trends report offers unique insight into the digital advertising industry. Thanks to Adweek, marketers do not need to read through the 355-page report for the key takeaways.

1)    Dip in Smartphone Sales

In 2016, smartphones saw not only a decrease in sales but also in user-base growth. Globally 2.8 billion people own smartphones. While they remain extremely popular, the user-base only grew by 12 percent in 2016 compared to 25 percent in 2015.

2)    Increased Time Spent on Mobile

Adults spend an average of 5.6 hours per day consuming digital media. The majority of that time (3.1 hours) is spent on mobile devices while desktops account for 2.2 hours. The remaining 0.4 hours come from other devices.

3)    Internet vs. TV Ad Spend

The total Internet ad spend is growing faster than television ad spend, and 85 percent of Internet ad spend is through Google and Facebook. Compared to its 2015 ad revenue, Facebook experienced a 62 percent growth in 2016.

4)    Voice is the Next Frontier

Between the fourth quarter of 2016 and the first of 2017, Amazon’s voice-enabled assistant, Echo, gained 3 million users. With its increasing personalization, voice and visual recognition are considered to be the “next frontiers in search and discovery” by Photon’s VP of marketing, Michael Levine.

5)    Ad Blocking on the Rise

With about 640 million devices utilizing ad blockers in 2016, marketers have the right to remain wary of the software.

Gen Z and the Future of Television Advertising

In an effort to understand the future of television advertising, Tremor Video and Hulu partnered on a study to research the viewing habits of Generation Z compared to Millennials and Gen X. Gen Z is not only watching less television than their forebears but how they choose to access shows and movies is unique.

Even the language differentiates generations. The vast majority of Gen X say “watching TV” means access through cable or satellite whereas the majority of Millennials and Gen Z consider watching by an online source to qualify.

The reliance on streaming videos allows Gen Z to watch more at one time than through traditional cable or satellite. As reported in “How Gen Z Connects to TV: Exploring the Generational Divide in the Future of TV”, 60% of Gen Z watch multiple episodes in one sitting compared to just 44% of Gen X.

In an interesting twist, Gen Z is actually more receptive to advertisements and are the most likely to share video ads through social media. However, advertisers should be aware that Gen Z expects ads to be relevant to what they are viewing.

With 48% of Gen Z saying they watch less television than their parents, it would be wise to target ads thoughtfully. By advertising across platforms (48% of Gen Z say they browse social media while watching TV) and reducing ad loads, advertisers can reach Gen Z when it most counts.