Digital advertising sales grew by 17% to $178 billion in 2016 according to Magna Global, and are projected to overtake TV as the largest advertising category. In 2017, digital spending will surpass linear TV spending with 36.8% of US total media ad spend coming from digital and 36.4% allocated to TV. Meanwhile, this is the first year that desktop ad sales did not see growth, and in 2017, desktop ad sales will be in a permanent decline.
Digital Ad Spend is Growing – Mobile Dominates
Not surprisingly, much of the digital ad growth is driven by mobile and video. Global smartphone users are expected to reach 6 billion by 2020 and mobile advertising will increase to $215 billion, or 72% of total digital budgets. Mobile budgets require data to target ads efficiently, and marketers are beginning to leverage first party data to target potential customers and decrease wasted ad dollars.
Even as mobile continues to dominate, it is no longer a siloed environment. Cross-device marketing is on the rise as a way to combine digital data with offline data. This blended approach is part of the reason that more traditional and linear methods of advertising are eroding.
Video, video, video
Advertisers are spending $10.3 billion on video advertising, or 14.3% of total digital spend. According to the IAB, this represents an 85% increase from 2 years ago. There is “robust spend optimism” within the mobile video category with media agencies planning to increase their investment level. Some of the mobile video increase is due to programmatic, which makes a lot of the inventory more accessible. Programmatic video accounts for 41% of all digital video dollars, which represents a 58% growth over the last 2 years.
Advertisers want real customers in real time. People-based advertising in on the rise as a way to target audiences in a cross-device environment. This method seems to promise what the advertising industry lacks: viewability, targeted native formats, and better measurements as to who actually viewed the advertisement. The result is higher engagement from each dollar spent on mobile.
According to a study by Signal, 83% of media buyers report superior performance with addressable media. When considering campaign objectives, 63% of advertisers see better click-through rates and 60% have higher conversion rates. Considering that in 2015, ad blocking reduced publisher revenues by $22 billion, more advertisers and publishers are pursuing much more relevant and less-intrusive ads. Among media buyers, 25% said addressable media accounts for over half of their total digital ad spend.
The “Holy Grail”
Targeted video advertising in-app is the “holy grail” for businesses and enterprises who wish to capture audiences across fragmented devices. Whether it’s television, mobile phones, tablets, or even virtual reality, customers are looking at more content across more screens, placing advertisers and agencies who pursue targeted video advertising at an unprecedented advantage. With the level of interaction seen on these devices – up to 6 hours per day per user – today’s advertisers can reach anonymous and aggregated audiences across a global population.