Stations are shortchanging themselves, says Gordon Borrell: “Traditional media’s relentless requirement to do more with less has led to underperformance in the...digital space… While I’d agree that digital media offers product extensions for existing newspaper, cable, TV, radio and magazine customers, I’d also say that a far bigger opportunity exists.”
Stop Missing Digital Ad Sales Opportunities
As you fine-tune your budgets for 2014 and beyond, you will want to be sure that you are paying ample attention to the potential offered by your digital categories. ZenithOptimedia’s September 2013 Advertising Expenditures Forecasts are unequivocal in their predications that ad expenditure growth will be in Internet categories, with mobile offering the greatest opportunity.
I was doing some research into this because Gordon Borrell, CEO of local advertising research firm Borrell Associates, will be doing a Distance Learning Webinar for us next month and he’s pretty outspoken about this category. In fact, when we were corresponding about the topic, he said: “Traditional media’s relentless requirement to do more with less has led to underperformance in the fast-growing digital space…. While I’d agree that digital media offers product extensions for existing newspaper, cable, TV, radio and magazine customers, I’d also say that a far bigger opportunity exists.”
That makes sense when you look at the ZenithOptimedia report. They feel that television’s share of global ad spending has stabilized, “after growing slowly but surely for most of the last three decades.” For 2013, the agency predicts that it will account for 40.1% of the total global ad spending and fall slightly to 39.5% of all advertising in 2015.
The good news for television in the ZenithOptimedia report is that the future of media advertising is still video-centric. In fact, it expects overall video advertising to continue to rise. Together, television and online video attracted 41.2% of global ad-spending in 2012, and the agency expect it to attract 41.6% this year.
The agency expects total ad spending to rise from 3.3% in 2012 to 4.1% in 2013 and 5.6% in 2015. In comparison, Internet spending, which includes, display, paid search and classified spending, grew 16.4% over the course of 2012 and is expected to enjoy an average of 16% annual growth for the years 2013 through 2015.
Display advertising is the fastest-growing sub-category, with 20% annual growth, which ZenithOptimedia attributes to two developments that are well suited for broadcasters — the rapid rise of online video and social media advertising, which are growing at 25% and 33% a year, respectively.
Broadcasters, it appears, are helping drive this growth. “Measurement agencies are investing in research that should measure consumers’ exposure to traditional display ads more accurately, and track their exposure to video ads across desktop computers, tablets and television screens. Some broadcasters are starting to trade packages that include both online video and television spots.”
In addition, ZenithOptimedia reports, “Advertisers are now recognizing the value of social media for brand building and purchase consideration purposes.”
With respect to the other two sub-categories, they expect paid search to grow at an average rate of 15% a year to 2015, driven by continued innovation from the search engines, such as “the display of richer product information and images within ads, better localization of search results and mobile ad enhancements like click-to-call and geo-targeting.” They anticipate the online classified sub-category, which “has been subdued since the downturn in 2009,” to grow by just 4% for the rest of our forecast period.
Expectations are also high for rapid growth in mobile advertising, which the agency says is growing “seven times faster than desktop Internet.” This category, encompassing “all Internet ads delivered to smartphones and tablets, whether display, classified or search,” is forecast to grow by 77% in 2013, followed by 56% growth in 2014 and 48% in 2015.
While growth is being fueled by the rapid adoption of smartphones and tablets it isn’t taking away any of the current ad spending on desktop Internet advertising, which will continue to grow at an average of 10% a year, according to the forecast.
Putting some hard numbers against its forecast, ZenithOptimedia said it estimates global expenditure on mobile advertising totaled $8.3 billion in U.S. dollars in 2012, representing 9.5% of internet expenditure and 1.7% of advertising across all media. By 2015, it forecasts this total to rise to $33.1 billion U.S. dollars, which will represent 25.2% of Internet expenditure and 6.0% of all ad expenditures.
When it comes to North America, the agency describes it as “much more robust” than Europe. In its view, “Despite the rapid growth of the Rising Markets, the U.S. is still the biggest contributor of new ad dollars to the global market. Between 2012 and 2015 we expect the U.S. to contribute 28% of the $74 billion in U.S. dollars that will be added to global ad spend.”
We have asked Gordon Borrell to give us a deeper dive into that outlook for digital ad spending in the U.S. during a CPE-accredited (continuing professional education) distance learning webinar from MFM that’s scheduled for Tuesday, Nov. 19, from 3:30 to 4:30 p.m. ET.
As its title “Budgeting for Digital in 2014: Thinking Big Pays Off” suggests, the webinar is designed to help local TV stations and other media providers take advantage of Borrell’s market-by-market analysis and consider his recommendations for placing the right value on this revenue potential.
Registered participants will receive a copy of Borrell’s Digital Forecast for 2014 as well as a set of freely available tools to calculate market potential based on the firm’s decade-long benchmarking analysis encompassing more than 6,300 local media companies.
In what may turn out to be more valuable than the data, Borrell will also provide his insights on what it tells us about how we should be approaching the digital media ad market. In his experience, most media companies view digital media as a product extension, applying the same growth rates and margin requirements used for their traditional business lines. “The result is that they chase the wrong digital products, shut down some digital experiments too soon, and almost always experience mediocre growth in digital revenue.”
In contrast, looking at digital media as a start-up business opportunity opens the door to broader growth opportunities.
For Borrell, the first step for companies is to ask “How much could we be making?” This he believes is anywhere from three times to as much as 10 times more than their current digital media revenues. As he says, “When they see that — and believe in the validity of those numbers — big things start happening.”
More information about the Borrell Webinar may be found on MFM’s website here. I hope you’ll make time to join us for this timely analysis. With the number of ad dollars going into digital media predicted to grow in each coming year, you owe it to yourself and to your ownership to evaluate the market opportunity and to determine whether you are truly positioned to take advantage of this dynamic growth opportunity.
Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at [email protected]. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.