6/11/2009. Houston, TXPlunkett Research uncovers 10 advertising industry trends that will have a major impact on advertising agencies, media and media buyers. This and more is reported Plunkett’s Advertising & Branding Industry Almanac, 2009 edition.
“Advertising in the U.S. was about $285.1 billion in 2008. This includes national advertising, which was estimated at $193 billion, plus local advertising such as local TV and local newspapers, states Jack Plunkett, CEO and Editor of Plunkett Research. “Worldwide advertising revenues were about $653.9 billion in 2008. Among the best growth areas in advertising in recent years have been advertising on mobile devices, advertising on movie screens and advertising online.”
Plunkett’s 10 advertising and branding industry trends:
1) Overall Advertising Budgets are Down, While Online Advertising Slows - Forecasts for 2009 are grim due to the global economic crisis, pointing to a decrease of 3.2% in the U.S. (not including local advertising) and 0.2% worldwide (which also does not include local advertising). However, the arena of online advertising has seen tremendous growth in recent years, and despite an overall economic slowdown, analysts are expecting further growth in 2009. Global Internet ad growth is expected to slow from 22% in 2008 to 10% in 2009. The fastest growing segment within online advertising continues to be video. It is estimated that advertisers spent $652 million on streaming video ads in 2007; and by 2011, advertisers will spend approximately $3.9 billion. Meanwhile, many advertisers are demanding harder evidence of impact and return on their advertising dollars, wanting to make sure their money is going to the right place, and that they are not being billed for expenses they did not authorize.
2) Online Advertising Becomes Targeted, Nears 10% of Total U.S. Advertising Market - The Internet has grown up a lot in recent years, and so has online advertising. Both the audience and the level of sophistication in advertising have increased dramatically, and advertisers large and small have made the Internet a significant part of their advertising strategies. It is estimated that 10% to 18% of consumer media viewing time is spent on the Internet. Online advertising expenditures in the U.S. will grow to about $26.7 billion in 2009, up from about $25.5 billion in 2008. Major advertisers are expanding their online advertising budgets rapidly. There are several online advertising methods such as “pay-per-click” advertising, in which an ad is placed online and each time a consumer clicks on the ad, the company being advertised is then charged a small fee; and “in text advertising,” a method in which advertisers pay for certain words in news or general interest articles to be underlined on third-party sites. Meanwhile, social networking sites such as Facebook, MySpace and others are attempting to profit from the fact that tens of millions of users have each written personal profiles disclosing vast amounts of information including demographics, preferences and more.
3) Google Dominates Online Video Advertising - A growth area in online advertising is clickable videos, and as of 2008, Google just about had a lock on it. The fact that Google owns YouTube gives it a great knowledge base in how the online audience may interact with videos. In 2007, it was estimated that 121 million Internet users per month watched streamed or downloaded video in the U.S., which is expected to grow to 165 million per month by 2011. There is significant potential to add a video element to targeted advertising. On web sites other than its own, Google sells video ads that can be clicked upon or contain text that can be clicked. Google’s purchase of DoubleClick, Inc. in 2008 greatly expanded the search engine firm’s abilities in online video ads. In addition to Google’s plans, clickable video ads already appear on sites such as MSN.com and MSNBC.com.
4) Television Attempts to Evolve to Face New Challenges - During the 2008-2009 season, the total number of television households in the U.S. was estimated at 114.5 million, up 1.5% from the previous year. Other phenomena such as Apple Computer’s iTunes music and video service helped increase viewership as iPod users download and watch prime time programming. Mobile TV programming watched via cell phone is adding to this trend. While this appears to be good news for producers of television programming, it is not necessarily positive for advertisers. Concerns about audience size, viewing time and attention paid to commercials continue to nag the television industry. Plunkett Research estimates that $71.6 billion was spent on broadcast and cable TV advertising in 2008 in the U.S. Another challenge to traditional 30-second television ads is the fact that there are more than 500 cable channels in the U.S. alone, and that number continues to grow. Advertisers and networks alike are attempting to come up with several new ways to present advertisements and keep viewers engaged.
5) Video-on-Demand (VOD) and Subscription Video-on-Demand (SVOD) Go Mass Market - Cable companies such as Comcast, Time Warner Cable and Cablevision already have a presence in a vast number of U.S. homes. In a growing number of markets across the U.S., they offer video-on-demand (VOD), subscription video-on-demand (SVOD), high-speed Internet service and/or digital programming for HDTV. On-Demand growth at Comcast has been nothing short of spectacular. As of late 2008, Comcast had delivered more than 10 billion On-Demand views since 2003. The firm was providing 275 million On-Demand views each month as of September 2008. Satellite company, DirecTV made major strides against the cable market when it successfully launched its own VOD service in 2008. The firm designed an interface that uses DVR and broadband connections to overcome satellite’s technical limitations.
6) Embedded Advertising/Product Placement/Branded Entertainment and Marketing Soar - Today, more than ever, marketers are seeking ways to get their products and brands in front of consumers in a relevant and effective manner through embedded advertising, which is the practice of arranging for products and brands to be seen in use by entertainers or athletes, or in relation to a specific event or locale. Spending on branded entertainment marketing reached a record $22.3 billion in 2007, up about 14.7% over the previous year, and would grow to $25.41 billion in 2008. Branded entertainment can be an effective way to embed brands. A growing number of TV shows, especially reality-based programming, are providing advertisers with new means of reaching viewers with implanted advertising. This is vital since, with the advent of DVRs, viewers are fast-forwarding through ads or skipping them altogether. Yet another booming branded entertainment venue lies in brand placement within electronic games. Media experts at Nielsen project that brand placement within electronic games will grow from about $75 million in 2005 to as much as $1 billion in 2010.
7) Daily Newspapers Closing/Combining Online with Print and Launching Weekly Specialty Papers - The print publication industry is undergoing drastic changes. The causes range from the global economic crisis to competition from the Internet. Many publications have been struggling to maintain their subscription and advertiser bases, often without much success. The Audit Bureau of Circulations reported that circulation at 507 U.S. newspapers fell 4.6% in the six month period between March and September 2008. The drop follows a 2.6% fall during the same period in 2007. Newspaper ad sales are falling on both the national and local levels. The rapidly growing use of specialty Internet sites like Craigslist, eBay, Monster.com and Autotrader.com is slicing market share from classified papers. However, newspapers are fighting back by putting more and more emphasis on their own local web sites.
8) Billboards Go Digital - Outdoor advertising posted $7.0 billion in revenues in the U.S. in 2008, according to the Outdoor Advertising Association of America. This is a 4% drop from 2007, largely due to the global economic crisis. The fall follows a phenomenal period of growth from 2001 through 2007, when revenues grew 40%, from $5.2 billion to $7.3 billion. One of the most current venues for advertising is plasma billboards and signs. Take a stroll around Times Square in Manhattan, wait for the tube in London or drive down the strip in Las Vegas for glaring examples. These dynamic screens, able to rapidly change messages or display continuous video streams, can be both eye-catching and relevant, in contrast to their static precursors. Benefits include the ability to alter time-sensitive messages such as dates, times or prices.
9) Location-Based Services (LBS) and Mobile Advertising on Cell Phones Grows - GPS technology is allowing advertisers and information providers to push information to mobile consumers based on their locations. This type of location based advertising is already common in Japan and in parts of Europe. In America, several leading companies have developed expertise in enabling GPS maps and location based data to appear on cellphones including Nokia Maps, TeleNav and MapQuest. Thanks to rapidly evolving technologies, cellphones have the potential to deliver a wide variety of advertising and local data to the consumer. Enablers include faster Internet access for cellphones (including new 3G networks with very high speeds); color screens; TV and video delivered to the cellphone by subscription; and mobile access to Internet sites that were created especially for use by cellphone consumers who are on the go. It is estimated that global mobile advertising revenues were $1.7 billion in 2007, climbing to $2.7 billion in 2008 and are expected to reach $12.8 billion by 2011.
10) Hispanic Market Gets Growing Focus - In the United States, ethnic populations are rapidly expanding, along with their buying power. By the end of 2007, Hispanic spending power was expected to rise 315% over 1990 figures, to $926 billion. This represents a 131% gain over the figure for all Americans in the same time period. The Hispanic population in the U.S. is expected to reach 70 million or 21% of the total population by 2020. As a result, companies like Sears Roebuck, McDonald’s and Procter & Gamble have been dedicating larger portions of their advertising budgets to Hispanic media. Additionally, there are now a large number of advertising agencies specializing in ads that target Hispanic consumers, and revenues at radio and TV stations that target the Hispanic audience have been soaring.
Additional information is available in “Plunkett’s Advertising & Branding Industry Almanac 2009”, as well as on our web site, www.PlunkettResearch.com.
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