Industry view: Behind the IAB's digital adspend figures

Annual growth, which at nearly 14.4% is at a five-year high, was driven by a surge in display, video and social media advertising, as people spend more time than ever online and technology moves from early adopters to the mainstream.

As advertisers look for greater efficiency amid tough economic conditions, and digital advertising becomes more sophisticated, in terms of targeting, measurement and creativity, it  is fast becoming a safe bet for ROI.

Many commentators claim there is a shift in spend from 'traditional' media towards digital, but there are also those who say digital is not a single medium, but different channels, which can enhance traditional media when used together.  

The IAB’s Tim Elkington, director of research and strategy at the IAB, said yesterday that it was ‘unclear’ where this spend was coming from.

According to previous estimates from the Advertising Association/Warc, digital's share of total adspend is expected to rise to 28.5% in 2011 from 26.1% in 2010. Total adspend is forecast to grow 1.6% to £15.92bn.

AA/Warc will release actual figures for adspend in 2011 next week.
 
Media Week asked four digital experts where they think digital spend is coming from and how they envisage the market developing in the near future.

Charlie Mcgee, managing director, Carat Digital

As digital advertising improves, there is generally greater confidence in it. Over the past few years big advertisers like Unilever and P&G have spend quite a significant amount of time looking under the hood of digital media and have discovered, to everyone’s delight, there is value to get out of it.

That value is especially amplified when it is used with other forms of media, like TV, to create greater noise and enhance the broadcast message.

Some budget allocated to digital may have come out of press and TV, but I do still think there is additional budget available for the braver marketers who know that when times are quite challenging, it is a good opportunity to invest and try and get some market share.

I can’t see spend climb in the same way year after year, as everything has its limit in the economy of scale and at some point the increase in investment will not equal the increase in ROI.

But what I do think is there is a big opportunity for the industry in mobile - when you look at the time spent on mobile versus the share of advertising investment it gets, meaning there is reason to be optimistic.

There is a need for greater creativity in digital advertising and while there are a lot of social networks, the products out there at the moment really require development to excite advertisers.

Creativity in digital advertising has never been as important than now.  


David Graham, head of digital strategy, Havas Media

Yesterday’s announcement is evidence that the sector has weathered the recessionary storms pretty well and shows that online ad spend in the UK should hit the £5 billion mark by the end of this year.

Mobile, video and social media advertising have been the main beneficiaries - all up over 100% with big brand advertisers following consumers as we all become increasingly used to looking at stuff on our mobiles and watching TV shows via YouTube and services like 4oD and BBC iPlayer.  

Budgets tend to be fixed and the flexibility comes in the channel allocation which is seeing a larger share going in the direction of digital now that client confidence levels and understanding have increased along with opportunities to reach audiences at scale online.

VOD is a good example where the past couple of years has seen a greater slice of TV budget being allocated to video, which can achieve incremental reach and frequency often more efficiently than if that budget had remained on the TV line of the plan

Impressive indeed, yet issues remain and the industry needs to continue to move beyond simplified currencies of clicks, impressions and likes if we are to encourage even more brand budget online. That said, both search and display had a strong year - the former buoyed, presumably, by stellar mobile search growth.  

And with attribution challenging the last click model, which search usually wins, the case for investing in display has become more compelling.


Sean Ramsay, digital account director, UM London

With digital platforms now central to a large percentage of clients’ communications strategies, it’s no longer a case of increasing digital adoption driving additional spend, but rather increasing understanding, amongst both agencies and clients of the sophisticated opportunities that are available to advertisers.

Continued economic uncertainty means accountable opportunities like these become more and more appealing.

There’s not one single factor to which we can attribute this growth -  it’s something we could debate for weeks. However, I would highlight the further expansion and integration of social platforms, evolution of the data-driven real-time buying model, and advancements in hardware, operating systems and browsers as all having significant contribution to the continued growth.

I wouldn’t be surprised if it went higher this year. Again this will be fuelled by advancements across several areas rather than just one, including search, data, social, video, mobile, tablet, HTML5 and whatever Microsoft, Google and Apple have up their sleeves.

As long as these advancements coincide with a demonstrable improved ROI, advertisers will continue to increase spend.

While the advances in data-driven buying and social integration have done much to account for increases in spend over the last 12 to 24 months, they also represent one of the biggest challenges.

2012 will have an even bigger focus will on what advertisers are doing with our data and if not managed properly may have a significant impact on the trust of consumer and subsequently marketers and their budgets.


Richard Sharp, UK managing director of ValueClick Media

The IAB figures reveal a huge growth in the display market over the past two years, taking a 24% slice of the £4.8 billion online advertising industry.

There are two key reasons for this development. Firstly, data is being used intelligently alongside technology to ensure advertising is relevant to consumers, which is having a huge impact on the performance of display adverts and means marketers are investing more in the channel.

Secondly, the rise of mobile and social has been hugely beneficial to the display market. We are seeing a meteoric rise in mobile users and advertising on this platform is proving to be influential for brand advertising as well as driving clicks. This has allowed the display market to evolve and start branching out into advertising fields where it was previously deemed insignificant.

The influence of display is set to grow, as the pairing of data and technology is allowing the industry to speak directly to consumers and offers brands more confidence in reaching their target markets, and this is made evident in the results that are being generated.

This article was first published on mediaweek.co.uk