3 Major Transformations for the Advertising Ecosystem

Jun 12, 2014   

Posted by Ashley Osgood

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New technology has changed the advertising ecosystem tremendously, offering new ways to optimize ads, deliver relevant content, charge a premium for ad inventory and understand and reach consumers more effectively.  Digital advertising is growing with innovative platforms that help advertisers drive more commerce and engage with consumers at the right places and times.  

Here are 3 Major Transformations for the Advertising Ecosystem

1. Mobile is poised to overtake desktop and exceed its usage by 2016.

Mobile advertising is about using the power of always-connected mobile devices to create stronger connections between advertisers and their audiences. Mobile devices captivate consumers because they augment and enhance their lives, prompting them to openly share their location and social data. Advertisers can use this individual-level data to bolster marketing strategies and messages.

The aggregation of data from a mobile device allows advertisers to gather context on their audiences, enabling better targeting for brands, more relevant content for consumers, and higher value ad inventory for publishers. True context data delivers higher profitability for the same ad impressions. Advertisers can improve user engagement by reaching their audiences with relevant, higher value content where and when they are ready to make a buying decision.  

Here are some interesting stats on mobile advertising:

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  • Mobile is growing 6 times faster than desktop internet advertising as smartphone and tablet adoption spreads. 
  • Mobile is expected to see average annual growth of 50% between 2013 and 2016.

  • Mobile advertising will top $45 billion by 2016 and account for 28 percent of online ad spend and 7.6 percent of the all advertising expenditures to become the fourth-largest medium ahead of radio, magazines and outdoor.

2. Programmatic advertising takes hold.

Another significant transformation for the advertising ecosystem is that programmatic advertising is replacing manual media planning and buying processes. Automated advertising through exchanges enables publishers to make their inventory more accessible and to charge higher ad prices. With private exchanges, publishers are charging $5 and $10 CPMs, with ads commanding those prices growing around 20%.  

Here are some interesting stats on programmatic advertising:

  • Programmatic buying is boosting the pace of expansion of display advertising, now the fastest growing segment of online advertising. With display advertising growing at 21% a year, it’s expected to hit $74.4 billion in 2016.

  • Worldwide RTB-based spending was $1.4 billion in 2011 and forecasted it will rise to $13.9 billion by 2016, for a compound annual growth rate of 59.2%.

  • In the U.S., RTB was $1.1 billion in 2011, and will rise to $8.9 billion by 2016, for a compound annual growth rate of 53%. By 2016, RTB will make up 27% of all U.S. display ad spending.

3. Native advertising delivers relevant content.

It’s no secret that it is increasingly difficult to get a brand in front of consumers. More than ever before, advertisers looking for reach are encountering greater competition for space. And they have to be interesting and relevant enough to capture the attention of their target audience. Enter Native Advertising.

It is becoming increasingly difficult to get brand messages in front of the right consumers. 42% of respondents to a recent Dartmouth study said the mobile experience makes content more immersive than on desktop. The natural solution to mobile ad shortcomings is to turn the ads into content. Enter Native Mobile Advertising.

We’re seeing it already with ad products from Twitter and Facebook--mobile apps creating new and unique revenue streams by embedding branded messages into the mobile experience. When the immersive mobile experience delivers branded messages that are personally relevant to consumers, everybody wins.

Here are some interesting stats on native advertising:

  • U.S. native-ad spending on social sites is expected to hit $2.36 billion, or 39% of total U.S. paid social ad spend this year, according to a report from market research company BIA/Kelsey. The report forecast that social native ad spend will grow 93% to $4.57 billion by 2017.

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Topics: Advertising