display advertising

The recovering economy is driving bullish projections for online advertising. Two trends are apparent: the dollars will migrate toward the outlets with the largest and best performing audiences, and the trend towards leveraging social media tools in marketing continues to be a small portion of overall spend.

eMarketer has featured several research snippets and projections over the past couple of weeks that help support these observations.

Forecasts from leading market observers regarding online advertising growth are getting increasingly bullish, a recent roundup shows.

US online advertising proved at least somewhat recession-resistant in 2009, if not recession-proof. eMarketer estimated in December that spending on online ads dipped 4.6% last year to $22.4 billion and forecast a return to growth of 5.5% this year. Other firms have published projections in the past three months predicting that 2010 ad spending will increase more steeply.

The forecast from Citi Investment Research presented in the accompanying chart shows the strong growth in both search and display advertising projected for 2010. The biggest growing category continues to be digital video.

Within the overall online landscape, the top ad portals exert a disproportionate amount of influence. eMarketer’s research shows that the top four portals will account for more than 57% of all internet ad spending in 2010.

Google is by far the dominant player, driving more than 3 times the share and more than 2 times the average revenue per user than its closest competitor, Yahoo!.

The hegemony of the largest sites and the relatively fixed share of market for the top internet advertising outlets mask a developing shift in consumer behavior that portends continued strong growth for content marketing and social media marketing.

Consumers are becoming increasingly more likely to respond to advertising when it is accompanied by good content.

An ARANet Adfusion study shows that web users are significantly more likely to take action on an online ad when it is close to “online articles that include brand information” than when they see the ad as a sponsored search engine link.

“We’re seeing that article-based advertising rates highest with these important and discerning audiences,” said ARAnet president Scott Severson, in a statement. “Compared to other online advertising options, consumers prefer reading an article, evaluating it, and then deciding to click through for more information.”

Sponsored search links also appealed to younger and higher-income targets, with 23% of 25- to 34-year-olds saying they were very likely to act on such ads compared with 11% of respondents overall. Banner ads and e-mail offers appealed most to the 18-to-34 age group, as well as Hispanics and African-Americans.

This increased responsiveness — which should lead to increased sales — is the basic reason for companies to incorporate content into their marketing and advertising programs.

The tactical question is how to best distribute the content so that it will be encountered frequently by consumers, with an effective ad or response tool available at the same time. But it would be a mistake for companies to look at the overall projections for internet marketing and conclude that content marketing, and the viability of social media platforms, is a passing fad with no real value to the bottom line.

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