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Display advertising now accounts for almost a quarter of total online ad spend, boosted by commercial innovation in social media and a greater variety of video formats, found the latest IAB/PWC survey.

The biannual study found that internet ad spend in 2010 grew by 12.8%, passing £4bn.

Overall, display advertising rose by more than a quarter (27.5%) to a new high of £945m, representing 23% of total online spend, up from 20% in 2009. A 200% leap in social media display advertising and 91% growth in video formats contributed to the resurgence of the channel.

Many traditional media owners regard the flood of social media inventory as a threat to their premium offerings, but really advertisers are looking for a mix of premium content and socially targeted direct response.

Rather than bemoaning Facebook taking the lion’s share of display spend, media owners could take a leaf out of its book: focus on learning as much about their audiences as possible through direct communication, build contextual strengths and boost commercial innovation.

Gina Lovett

IAB CEO Guy Phillipson said the figures supported a continuing trend for the internet to be used as a branding medium, with more brands now looking at digital as the core of integrated campaigns.

At the time of the previous survey in October 2010, FMCG investment was cited as a major contributor to the continued growth of online (nma 7 October 2010). This year, consumer goods manufacturers were the top three display spenders, with finance overtaking entertainment and media in share of ad spend.

Phillipson said, “We’re now looking at 12.8% growth overall. The big change [from the last survey] is that we now know the full force of brands returning to online.”

He added, “The big story, though, is social media and video. Advertisers are getting the reach and dwell time as well as the shareability. The sheer reach of social media, and the billions of impressions out there – and now you can target social ads to declared interests – is pretty powerful.”

Although the IAB hasn’t given a full breakdown, the real beneficiary of the current resurgence in display advertising has been Facebook. The social network accounted for 81.6bn page impressions in Q4 2010, according to ComScore’s top UK online ad display publishers.

Charlie McGee, head of digital at media agency Carat, said that with Facebook working hard to develop its technology and targeting, including its advertiser API, it’s little surprise it has grown so “meteorically”.

“Facebook spend is primarily direct response. Complex financial products are doing more on Facebook and it’s really effective,” he said. “What Facebook doesn’t offer is the engagement you get from bought media, where big portals and newspapers offer different content.”

It’s on this front that original content sites are fighting an increasingly competitive battle against the social network. Chair of the IPA Matt Simpson previously told new media age that spend for content owners had “dropped off a cliff in the last two years”, due to the rise of social networks (nma 9 December 2010).

At the end of last year, the Association of Online Publishers kicked off an offensive by media owners to reassert the value of premium brand advertising on their sites. It published its first research into the relationship between engagement, content and ad responsiveness, which showed consumers engage more with advertising on trusted content sites than social networks or portals (nma.co.uk 2 December 2010).

At the same time, Facebook has been courting UK brands, boosting its European staff and expanding its preferred developers network to help create more effective ad campaigns (nma 2 December 2010).

Havas Media director of social Amy Kean pointed out that the commercial  innovation driven by Facebook is a big pull for advertisers. “You have simple, accountable functions like being able to see which of your friends likes an ad on Facebook: it puts display into context,” she said. “Brands are looking for accountability and to make their paid media work harder. Facebook doesn’t work in isolation. You need to have a reason to be there, and it’s very often part of a campaign to drive people there.”

Expenditure on pre-, mid- and post-roll video ads nearly doubled to £54m, from £28m in 2009, according to the IAB/PWC study.

McGee said that brands have been using VOD, with high recall and message impact, “purely from a test perspective”. But as performance figures start to come through, these will become established. “If VOD inventory is already selling out, you can imagine what it’ll be like when it becomes mainstream,” he said.

Online ad spend

£945m, up 27.5% from 2009, now representing 25% of total online spend

Spend on pre-, mid- and post-roll video ads doubled to £54m from £28m in 2009

Paid search grew by 8% to £2.3bn, representing 57% of total online spend

Grew by 32% during 2010 to £83m


Published 29 March, 2011 by NMA Staff

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