Advertising spend trends: mobile, video, apps

Wednesday, July 29, 2015      Karin Fleming       0

What are the latest emerging trends in advertising? At a time when TV, radio, newspapers, magazines and the internet compete for ad revenues, which platform will come out on top in the future? The FIPP Insight Special Report: Global Digital Revenue Trends, published on 19 July and written by Martha L Stone (World Newsmedia Network), provides insight into facts and figures in advertising spend from a global perspective. Additionally, thanks to predictions from marketing and consulting agencies mentioned in the report, we can anticipate which way advertisement will in following years. The entire report is available on the FIPP website.

Regional disparities in adspend globally

In 2014 and 2015 adspend (the amount of money spent on advertising for a product or activity) has been decreasing in developed regions such as Western Europe, Central and Eastern Europe, North America and the Asia Pacific while in fast-growing regions such as Latin America or Emerging Asia (China, India, Indonesia, Malaysia, Mongolia, Pakistan, Sri Lanka and Vietnam) financial resources invested into advertisement increased. To illustrate this situation: adspend in Latin America grew by 11,4 per cent, in the MENA region it grew 2,3 per cent and for Eastern Europe and Central Asia adspend decreased 9,4 per cent. Share of global aspend by medium: desktop or mobile?

According to ZenithOptimedia mobile advertising is growing nine times faster than desktop internet advertising. Zenith also claims that mobile internet will increase by 39,8 per cent a year between 2014 and 2017. On the contrary, desktop advertising is predicted to increase only by 4,6 per cent. Based on the numbers mentioned above, we can see that mobile devices have slowly increased in relevance, and should these trends continue, may even represent the lead in adspend in the near future.

Today, television leads adspend in most countries (US, Canada, Italy, Hungary, Poland, Spain, etc.), but the vast majority of regions have seen internet adspend increasing and (slowly) attacking this position. According to predictions, global internet advertising will overtake TV advertising by 2017. According to eMarketer the advertisement expenditures have shifted in all US media to digital platforms, including mobile and PC-based internet, while revenues from ‘traditional media’ such like television, newspapers, magazines have diminished.

Which content and where?

According to data provided by PricewaterhouseCoopers mobile advertising will outrun display advertising by 2018. The fastest growing tool for internet advertising is wired video. In 2014, it represented 4 per cent of all internet advertising, but within the next five years this number is likely to double. Moreover according to Zenith, video is the fastest-evolving digital category. In the coming years, digital video is predicted to reach multi-billion and billion dollar levels in revenues in the following countries: the United States, China, Japan, the United Kingdom, Germany, France.

Applications of tomorrow

Digi-Capital claims that games app have dominated the mobile apps market since the very first emergence of mobile applications. However, this situation has been shifting and we can anticipate a more diverse composition of apps on the market. Based on the data provided in the report, non-games apps will make up 51 per cent of the entire apps market in2017 . This is a big decrease from just two years ago, when 74 per cent of the total apps market was held by games apps. The biggest area of growth for non-game apps are in social networks, books, music, and medical apps.

Current trends in advertising

Obviously all these shifting trends increase the demand for a variety of dynamic innovations in the advertising sphere. According to the report, publishers should focus on collecting data about consumption behaviour/habits and then address consumers’ needs accordingly.

One of the trends is via programmatic buying, which is both a great opportunity and a challenge for publishers. The system of programmatic buying is challenging due to the fact that ads are being treated as commodities by automatic exchanges, which drives down CPM (cost per thousand) prices. These advertisements serve a huge numbers of websites, usually regardless of the quality of the sites’ content or target audience. These conditions cause the value of publishers’ advertising inventories to decrease.

Nevertheless, publishers should take advantage of the possibility to create high-value ad networks through programmatic buying. By doing this, the networks gain higher value and become more popular than if they would appear exclusively on publishers’ sites. For instance in March 2015 Guardian, CNN International, Reuters, the Economist and the Financial Times established Pangaea Alliance; an advertising network allowing to buy campaigns across 110 million media users of the five upscale media brands. Pangea Alliance usesRubicon Project platform for its advertising inventory. Another example of advertising networks in Europe can be La Place Media in France or Dansk Udgivernetvaek in Denmark.

Native advertising is a lucrative new revenue system that enables a number of possibilities and can drive high engagement with users. It probably will play an important role in engagement with mobile platforms and the potential to gather data from readers. However, there has been criticism regarding the transparency of native advertising: in order to prevent possible dissatisfaction from consumers, publishers are trying to make ads recognisable but still blend with editorial content. This can leave a reader feeling betrayed, especially if they didn’t notice the content they were reading was sponsored right away.

Another challenge is the need for an adequate strategy. This goes hand-in-hand with needing a skilled labour force. So far there has not been a set of rules for these strategies as everything is being developed during current processes andeach publisher develops its own strategy. Therefore metrics and performance indicators are largely unknown. Thus content developers, usually sales and team members, of native advertisement have to be well trained and have appropriate set of skills.

For more information about native advertising and consumers’ attitude, please read our previous blog post: Native advertising: finding the right balance.

Based on information coming out from FIPP Global Digital Revenue Trends 2015, we can notice that some dynamic shifts in advertising are emerging. Adspend into internet keeps on rising and will surpass the first position of television adspend in some countries in the near future. Also we can see that branding companies are shifting their attention from laptop to mobile advertising. Obviously all new trends pose challenges for publishers, who then need to adapt to these changing dynamics.