Internet Ad Spend to Surpass Newspapers in 2013

Prediction from ZenithOptimedia Adspend Forecast

Internet advertising expenditures will surpass newspaper advertising in 2013, to become the second largest advertising medium, according to the most recent quarterly forecast on global advertising expenditures by ZenithOptimedia (July 2011).

With a forecasted growth rate of 14.2% per annum, Internet advertising will grow from $63 billion in 2010 to almost $954.5 billion in 2013. Advertising in global newspapers is predicted to decline over this same period from $95.2 billion last year to just $92.8 billion in 2013.

If these projections come to fruition, Internet advertising will account for 18.3% of all global advertising expenditure (up from 14.1% last year), while newspapers will receive just 17.9% of the advertising pie, down from 21.3% last year.

Television advertising is forecast to have moderate growth, going from 40.4% share last year to 41.4% in 2013. Television accounts for the most new ad dollars over this period, growing from some $180 billion last year to almost $216 billion in 2013. TV advertising will remain at twice the level of the second highest medium.

While advertising in China will be approximately 50% higher in 2013, all markets are miniscule compared to the behemoth USA market, which at $151.5 billion last year was 3.3 times larger than second place Japan at $43.3 billion.

Over the next two years China will surpass Germany for the third spot on the advertising expenditure leader board, while Australia will climb one spot from 9th to 8th. Italy is projected to drop out of the top ten ad markets and will be replaced by Russia.

An interesting break down of Internet advertising expenditures shows paid search advertising accounting for almost 50%, with display advertising (36%) and classified ads (15%) accounting for the rest of this $90+ billion advertising pie.

Which Way Is Internet Advertising Headed?

A pair of expenditure reports on Internet Advertising has us wondering in which direction is this headed?

First, Britain became the first major market in which advertisers spent more on Internet advertising than on TV ads, with a record £1.8 billion (US$3.2 billion) invested online in the first six months of the year. Earlier this year Denmark became the first country where Internet ad spending overtook TV advertising spend.

Internet advertising now accounts for 23.5% of all advertising in the UK, with TV ads (down 17% in actual spend from the first half of last year) at just 21.9% market share.

Then, about a week after this report from the Internet Advertising Bureau (IAB) and auditor PricewaterhouseCoopers, the pair released a report stating Internet advertising in the U.S. dropped 5.3% to $10.9 billion in the first half of this year. Of course, that’s not as bad as the 15.4% decline in total advertising expenditure in the first six months of the year according to Nielsen figures.

Even more concerning (for those selling online advertising), IAB and PwC predict that total online advertising expenditure this year will fall in the $21 billion to $22 billion range, a significant drop from the $23.4 billion recorded last year.

So why has Internet advertising become the biggest advertising sector in the UK with a 4.6% year-on-year increase, while at the same time Internet advertising expenditures have dropped 5.3% in the U.S.?

And what’s happening in other major advertising markets, such as Australia, France, Germany and Japan?

Anyone have any insights on this?

Personal Recommendations More Trusted Than Advertising

Personal recommendations and consumer opinions posted online are the most trusted forms of communications, according to the latest Nielsen Global Online Consumer Survey. Over 25,000 respondents from 50 countries participated in the survey.

According to the survey, which is conducted twice yearly, 90% of Internet consumers worldwide trust recommendations from people they know, while 70% trust consumer opinions posted online.

Brand websites, the most trusted form of advertiser-led communications, are also trusted by 70% of the survey respondents. Fortunately for marketers, all forms of advertiser-led advertising, except ads in newspapers, experienced higher levels of trust in this most recent survey.

Brand sponsorship is the marketing category that has seen the most significant increase in trust levels since the Trust in Advertising portion of the survey was initiated in April 2007. Almost two-thirds (64%) of Internet consumers now trust Brand Sponsorships, up from just 49% two years ago.

Significantly, text ads on mobile phones have the lowest trust factor, with less than one-fourth of respondents saying they completely or somewhat trust this form of advertising. This is not going to make the folks at the Mobile Marketing Association happy!

Here’s the ranked order of the results for some degree of trust in the following categories:

1. Recommendations from people known (90%)

2. Consumer opinions posted online (70%)

3. Brand websites (70%)

4. Editorial content {e.g. newspaper articles} (69%)

5. Brand sponsorships (64%)

6. Television (62%)

7. Newspapers (61%)

8. Magazines (59%)

9. Billboards / outdoor advertising (55%)

10. Radio (55%)

11. Emails signed up for (54%)

12. Ads before movies (52%)

13. Search engine results ads (41%)

14. Online video ads (37%)

15. Online banner ads (33%)

16. Text ads on mobile phones (24%)

Trust in Advertising: Traditional Media Outrank Internet Ads

Nielsen conducted an online survey of more than 26,000 consumers and respondents provided their perceptions of different forms of advertising. These consumers rated Internet advertising at the bottom when it comes to trust as compared to offline media.

63% responded that they trusted newspaper ads, while 56% trusted television advertising and magazine ads. Both scores were significantly higher than search ads (trusted by only 34%) and banner ads (trusted by a meager 26%).

The respondents in this survey rated the trustworthiness of print and TV ads at over twice the level of banner ads!

Internet advertising may be the wave of the future, as all the pundits like to predict, but the creative execution and messaging of Internet advertising has a long way to go in terms of being trusted by consumers across the globe.

These results also mean that a solid, brand-based Internet advertising campaign will easily stand out amongst the plethora of promotions and high questionable pop-up ads proliferating the web space today.