With the arrival of the New Year, your company is most likely putting the finishing touches on your 2017 advertising budget. It’s crucial to determine where your money will be best spent and which platforms and outlets will deliver the highest returns. If your organization is currently on the fence on investing in digital or traditional advertising, recent statistics may help inform your next steps.
Is Traditional Advertising Dead?
Before we look at where the industry is going, it’s important to first look back at where we started. The heart of advertising used to lie with traditional forms like print, magazines and direct mail. But is this the end-of-the-line for traditional ads?
According to Suman Bhattacharyya’s AdvertisingAge article “Digital Ads to Overtake Traditional Ads in U.S. Local Markets by 2018,” traditional media is taking a hit. More specifically the latest local ad revenue forecast from BIA/Kelsey forecasts that in local markets, digital advertising (including mobile) will increase by 13.5%, growing from $44.2 billion in 2016 to $50.2 billion in 2017. However, the use of traditional media for local ads is predicted to drop by 2.4% from $101.1 billion in 2016 to $98.6 billion in 2017.
Local ad revenue from all platforms is predicted to have a slight increase of 2.4% to rise to $148.8 billion in 2017, the marginal increases explained by the decline of revenue from print media like newspapers, magazines and direct mail.
It is interesting to note that even with the rise of digital advertising (more on this later), traditional advertising is not dead. Direct mail owns over 70% of the traditional advertising market share, and many brands still utilize print media, television, radio, billboards, and placements on physical places like taxi cabs and elevators.
Digital Advertising Choices: Desktop or Mobile
Beyond traditional advertising, most companies want to know what is winning in the face-off between desktop and mobile ads.
According to George Slefo’s AdvertisingAge article “Desktop Search Ads Fall for First Time, IAB Says, as Digital Ad Revenue Sets Another Record,” mobile is on track to overtake desktop very soon.
What is the difference between the two? Desktop advertising is about the browser, while digital advertising happens in the open mobile web and in apps via a smartphone or other similar device.
In its latest Internet Advertising Revenue Report, the Interactive Advertising Bureau reports that digital advertising revenue hit an impressive new record of $32.7 billion for the first half of 2016, up 19% from last year’s record $27.5 billion.
The IAB report shows that mobile took up 47% of all digital ad spending, with smartphone/tablet advertising rising to $15.5 billion in the half, up 89% from the $8.2 billion in the period a year earlier. Even more impressive, digital advertising revenue has experienced double-digit growth for seven consecutive years. This is not surprising when you consider several critical trends, such as the 178% growth of video advertising (on smartphones and tablets) over a year period to reach $1.6 billion. Although it’s important to note that it’s unclear how much of this happened on apps (Facebook, Snapchat) or on the mobile web.
Search advertising on desktop experienced its first decline, falling 12% to $8.9 billion. On the flipside, mobile advertising grew 105% from $3.6 billion to $7.4 billion. This is representative of where search is moving. As an example, about 45% of overall search revenue came from mobile (an increase of 26% from the previous year) and desktop search contributed about 54% (a decrease of 74% in the first half of 2015).
It’s important to recognize that video is the shining star for both desktop and mobile, increasing by 51% from $2.6 billion to $3.9 billion within a year and a half. This article goes as far to suggest video is the last man standing for desktop devices, increasing 13% to $2.3 billion in the first half.
What happens to search as more consumers discover things through apps (like Amazon or Pinterest) on mobile devices? Time will tell how this will play into search market share.
What is Your Perfect Advertising Mix?
Even with all these numbers and statistics and the impressive growth of digital, the best advertising mix is completely specific to your organization and your target audience.
What advertising mix do you rely on for the best results? And, what do you think about the changing advertising landscape moving prominently toward digital? Will traditional media ever go away?
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