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Internet Advertising Trends - 2013 Internet Advertising Trends...Headwaters spoke to over 150...

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  • Internet Advertising Trends - 2013

    Mark R. Langner" Managing Director – Industry Analysis

    January 2013

  • Page 2

    Contents

    1.  Summary

    2.  Internet Industry Statistics – Internet Growth Shifting To Emerging Markets and Asia; Mobile Data Consumption Driving Importance of Mobile Strategies; Mobile is Growing at Expense of Desktop Usage in U.S. and Europe; Mobile’s Importance Grows as Users Sift from Desktop to Mobile; Social Media’s Importance for Internet Advertising is Established…; As Social Media Has Become Nearly 20% of Time Spent On-Line; Search is Changing – Becoming More Local and Mobile.

    3.  Internet Advertising Market Figures – Internet Advertising Has Grown Rapidly…; And is Projected to Continue Growing Rapidly; Digital’s Share of Worldwide Ad Spend Will Rise; Mobile Advertising Market Needs to Catch Up to Usage; Which Means Expect Mobile’s Share of Spend to Grow Fast.

    4.  Key Internet Advertising Industry Trends – Making Sense of the IA Landscape; Headwaters’ View of IA Landscape; The Basics (Search and Direct Response) – Still Lots of Opportunity; Search – Many Advertisers Still Struggle With The Basics; Direct Response Continues to Be Important – But Harder; Long-Term – Search and DR are Foundations for Success; Publishers – Tool Up, Adapt, or Die; More Analytics = Better Performance?; Importance of Attribution and Transparency; RTB is Growing Rapidly – Is this Good or Bad?; RTB – Our View and Outlook for the Future; What About the Long Tail?; Mobile – Convergence and Divergence; Will Brands Ever Go Digital?; Why Brand Dollars Will Eventually Move to Digital.

    5.  Internet Advertising and the M&A Trends for 2013 – Internet Advertising M&A Volume Remains Steady; VC Investment in IA Declining Rapidly; The IA Landscape, Investment and Consolidation; Where Do We Expect Continued Investment?; Where Will Consolidation Come First?

  • SUMMARY"

    Section 1

  • Page 4

    Summary

    Headwaters spoke to over 150 Internet Advertising companies in preparation of this report. A summary of the trends we are seeing is as follows:

    1.  Overall Internet Advertising growth remains strong as Internet Advertising takes share from traditional advertising 2.  Mobile is changing the landscape – yet is still, in many cases, separate from other web IA approaches and

    solutions.

    3.  Social media's importance for Internet Advertising is established – how to effectively deal with it is still a question mark for most advertisers

    4.  Search is becoming more local and mobile 5.  Current view of the Internet Advertising landscape is overly complicated - it's not that hard! 6.  Unless you offer neutral data and tools, you are not going to be able serve both publishers and advertisers

    effectively!

    7.  We are still early in the maturation of the sector 8.  Customer sophistication is still early – even the most successful advertisers "get it less wrong!” to a degree 9.  Search and DR remain the foundations for successful internet advertising campaigns – but no longer stand alone 10.  Big data, social and mobile driving richer data sets enabling advanced analytics 11.  Attribution & Transparency will be hot in 2013 as customers drive for better ROI  12.  Publishers - Tool Up, Adapt or DIE 13.  RTB is hot now - but winners must evolve quickly as publishers and advertisers become more sophisticated 14.  Brand dollars still sitting on the sideline (mostly) but change is coming 15.  M&A remains steady but multiples likely pressured in 2013 due to scale and overfunding

  • INTERNET INDUSTRY STATISTICS" "

    Section 2

  • Page 6

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    Internet Growth Shifting To Emerging Markets And Asia •  2.26 B Internet Users •  72% Growth During Last 5 Years

    •  Europe & U.S. Approaching Saturation •  Continued Strong Growth in Asia & Emerging Markets

    Asia  

    Asia  

    Europe  

    U.S.  &  Canada  

    Mid-­‐East  

    Africa  

    La9n  America  

    Oceania    

    Rapid  Growth/ Low   Penetra9on  

    Slower   Growth/ Approaching   Satura9on  

    1.0B  Internet  Users  -­‐  2011   99%  Growth  2007-­‐2011   27%  Internet  Penetra9on    

    139mm  Internet  Users  -­‐2011   215%  Growth  2007-­‐2011   13%  Internet  Penetra9on    

    501mm  Internet  Users  -­‐  2011   25%  Growth  2007-­‐2011   68%  Internet  Penetra9on     273mm  Internet  Users  -­‐  2011   15%  Growth  2007-­‐2011   79%  Internet  Penetra9on    

    Source:  ITU,  United  Na3ons,  US  Census  Bureau,   GfK,  and  www.internetworldstats.com    

  • Page 7

    Mobile Data Consumption Driving Importance Of Mobile Strategies

    Mobile Internet Usage Exploding; e.g., AT&T Mobile Data Usage Up 8,000% in Four Years

    2007                                2008                                            2009                                                        2010  

    5B  

    10B  

    15B   PB

    /M on

    th  

    Source:  AT&T  

  • Page 8

    Mobile Is Growing At Expense Of Desktop Usage In U.S. And Europe

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    N orth  Am

    erica  Internet  Users  (in  m illions)  

    3%  CAGR  

    In Established Markets Mobile/Internet Shift is Net Sum Game; U.S. User Growth at 3% CAGR; Mobile Share of Overall Internet Traffic Growing at 88% CAGR

    Source:    ITU,  United  Na3ons,  US  Census  Bureau,  GfK,   www.internetworldstats.com;  StatsCounter  Global  Stats    

  • Page 9

    Mobile’s Importance Grows As Users Shift From Desktop To Mobile

    Internet Use Shifting from Desktop to Mobile; Mobile Now 10.3% of Worldwide Internet Traffic

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  • Page 10

    Social Media’s Importance For Internet Advertising Is Established…

    Unsurprisingly, Adoption of Social Media is Huge; Facebook Dominates

    1mm   6mm   12mm   58mm  

    145mm  

    360mm  

    608mm  

    845mm  

    0  

    300  

    600  

    900  

    12/04          12/05          12/06            12/07          12/08          12/09            12/10          12/11  

    Facebook  User  Growth  

     M on

    th ly  A c9 ve  U se rs  (i n   m ill io ns )  

    Other  Social  Networking   Monthly  Ac9ve  Users*  

    TwiYer  465mm   LinkedIn  161mm**   Instagram  40mm   Pinterest  14mm***  

         

    Source:  Facebook,  TwiLer,  LinkedIn,   TechCrunch,  AppData,  comScore  

    *  As  of  5/31/12   **  As  of  3/30/12   ***  Includes  only  “Facebook   Connected  Users”  

    Facebook   Reaches  83%   of  American   Internet   Users    

  • Page 11

    … As Social Media Has Become Nearly 20% Of Time Spent On-line

    Social’s Share of On-Line Time Continues to Grow; Now Estimated as high as 25% of Time Spent On-Line

    6%  in  2007  

    19%  in  October  2011  

  • Page 12

    Search Is Changing – Becoming More Local And Mobile

    Local Search is Growing; Mobile is Key Driver and Poised to Overtake Desktop for Local Searches

    Source  comScore,  BIA  Kelsey  

  • INTERNET ADVERTISING MARKET FIGURES

    Section 3

  • Page 14

    Internet Advertising Has Grown Rapidly…

    Internet Advertising Market Growth Has Been Robust; 20.3% CAGR

    Source:  IAB  

  • Page 15

    … And Is Projected To Continue Growing Rapidly

    Spe

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