What the IAB and PWC’s latest report means for 2017

The IAB and PWC have released the latest digital ad revenue figures for 2016 and we thought you’d like to know what some of the findings are pointing to. These figures are based on the first half of 2016 compared with the first half of 2015.

The overall findings are that digital ad revenues continue to increase and compared to the same last year, they’re 20% higher. So while the chocolate bars get smaller, the crips bags offering significantly less crisps and our Toblerone’s changing shape – at least we can rest assured something in our retail economy is getting bigger. Digital ad spend.

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The report stated that historically we see around 53% of the years revenue coming from the second quarter – so we should see further growth when the next report is released. The trajectory is going one way – up!

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The big news is the domination in mobile video revenue growth

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‘Digital video on smartphones and tablets saw strong triple-digit growth, reaching $1.6 billion in HY 2016, an impressive 178% rise from HY 2015.’

We are seeing strong revenues across the board but unsurprisingly – the dollars have shifted toward the mobile platform with video growing rapidly.

As more mobile friendly ad formats begin to emerge toward the end of 2016 and beginning of 2017 we would expect this to continue increasing, as audiences interact with more creative, rich media and relevantly targeted ad units.

We know which ad formats are doing well, but the IAB has also taken a look at which categories are performing better. It’s no surprise retail is right there at the top but exactly what sort of retail and which formats work best for each would be good to analyze. Mobile targeted ads for the retail space are beginning to take off as people discover on the move so perhaps the second half of the year will reveal more about the changing purchase journey.

Whilst desktop search was down from the same time period in 2015 – combined desktop and mobile search is actually up 17% – at 8.4 billion in total revenues. This goes to show how the mobile device is taking over and that it’s an area where more analysis and investment will be focused in 2017.

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Click here to view the full IAB report. Video really is showing its strength across all platforms and as we introduce more relevance, better mobile experiences and brand stories the handheld device we all rely on is set to be the main revenue generator for media companies.

Check out The OverStream Suite of advertising formats to see just one of the ways Coull is making better ad experiences that are high performing, yet non-interruptive.

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Digital Advertising: Click-Through Rates

With digital ad spend swiftly rising year on year (Emarketer) it’s hard to ignore the change in the advertising landscape. We’ve come a long way from flashing banner ads and invasive pop-ups (although they are very much still around).

Advertisers are suffering from consumer ‘banner blindness’ and so are being forced to move away from standard formats and to be more creative in reaching their audiences. We all know that there’s a huge range of online advertising formats out there, but which ones should you bin and which ones should you adopt?

Check out our infographic below which details the average click-through rates from a range of online advertising formats.

Sources listed at the bottom of the page.

We’ve focused on click-through rates here as they are one of the most widely used metrics to evaluate the effectiveness of an ad format to drive response. However, it’s important to note that with any rich media ad unit that features brand creative, engagement rates are only one side of the coin. For many advertisers digital advertising is as much about branding as it is direct response. However, with attribution in brand uplift difficult to measure without focus groups and consumer research, click-through rates will remain a key metric for some time to come.

Trends in engagement

The building trends in digital advertising include real time bidding, online video, social media and of course, mobile. Something that can be be seen in all these formats is the buzzword of the moment – yes, native advertising. It seems pretty obvious that relevant, integrated advertising is going to be more effective these days than the more traditional methods. But what do the stats say?

Let’s look at the click-through rates (CTR). At the lower end of the scale display ads are seeing a CTR of around 0.11% and falling (Smart Insights). Mobile banner ads are performing slightly better at an average of 0.35% CTR (Marketing Charts). In fact, mobile advertising seems to perform better than desktop all round. Facebook news feed ads on mobile devices have an average CTR of 3-6% (Digiday) – a pretty impressive statistic. But what do you do if you want to completely trample those figures? You invest in mobile video ads. With a staggering reported CTR of 11.8% (Mobile Marketer) it’s hard to push to one side. Combine that with some clever native advertising and you’re on to a winner.

Video advertising in the marketing mix

We’re seeing brands and publishers increasingly taking advantage of these engaging and contextual advertising formats – and it’s paying off. A recent IAB report found that advertising revenue in the US from digital video increased by 24% in 2013 from the previous year and mobile revenue soared by 145% in the first half of 2013 (IAB). David Silverman, a partner at PwC US comments:

“This report not only confirms that brands are making a greater commitment to interactive, but also points to the fact that mobile and digital video are being identified as integral elements of the marketing mix. Internet advertising’s ability to impact and engage is evident across digital screens, whether big or small.” (IAB)

It’s an exciting time for the industry – with these developments in digital advertising technology opening up a better way for advertisers to reach their audiences. There are certainly some doubts surrounding native advertising, and there’s some catching up to do in mobile marketing, but the industry has come a long way since traditional advertising formats which arguably have pushed consumers away with their irrelevancy and invasive nature. Consumers are embracing new screens and new media, so that’s where we need to be.

In our next piece we will be exploring why engagement rates in mobile advertising is becoming increasingly higher than that of desktop.

Display ads 0.1%
Google display 0.4%
Facebook news feed 0.5% – 2%
Facebook display 0.12%
Twitter 1% – 3%
Video 4.25%

Facebook news feed 3% – 6%
Display ads  0.35%
Native ads 1.37%
Video 11.8%

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