The media advertising market represents 450 billions USD in 2007
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Starting with an exploration of the advertising market’s classic characteristics and organisation, the way it operates and its objectives, IDATE presents the new forms of advertising that are emerging, provides analysis of the assets inherent in the new advertising platforms that are Web 2.0 and mobile, and takes a look at traditional media’s reaction to market changes and their ability to adapt. Also included are market development forecasts for each medium.
The advertising market is a Dynamic sector overall. Between 2006 and 2007, media advertising spending worldwide rose by 5.2%, all media combined – totalling close to 450 billion USD in 2007. TV and print media continue to dominate the advertising market, accounting for more than three quarters of all advertising investments.
"Simply stating that all media are on a growth path masks very different realities for the different media and in the various geographical zones" analyses Florence LeBorgne, Project Manager.
Online advertising spending is enjoying a spectacular increase (+32.4% in 2007 compared to 2006), but ad spending on print media (+0.8%) is stagnating.
More dire still is the fact that print media and TV are losing ground in the most competitive markets, namely North America and Western Europe. Although these remain the richest markets, growth is now concentrated chiefly in Eastern Europe and the Asia-Pacific region – with China expected to become the fourth largest advertising market in 2008, overtaking Germany, while Russia is expected to move from 14th place in 2006 to the number six spot by 2010 (source: ZenithOptimedia).
Internet: an expanding medium
Now reporting 750 million users around the globe who spend an average 11 hours and 20 minutes online every week (European web user in 2006 – Source: EIAA), there is no question that the web has become a mass medium. As a result, it is attracting a growing number of advertisers and enjoying spectacular growth rates.Online ad revenue is forecast to increase by 76% worldwide between 2006 and 2009, compared to an only 16% increase for TV ad revenue and 9.5% for print media. By 2009, the internet is expected to be the number three ad medium, behind print and television.
Three main types of advertising have taken hold on the internet, each with a direct link to the phases in the buying cycle. Display or Sponsorship, search Marketing and Classified.
Search Marketing are the online advertising format of choice for intermediate size companies seeking to generate higher sales. The success of search marketing is tied to:
- its proven efficiency: it offers transformation rates that are, on average, four times higher than those recorded for other formats;
-the implementation of weighted auction systems, which makes it possible to optimise revenue by addressing a larger group of advertisers;
-search marketing is generally aimed at triggering an immediate action on the part of consumers, but can also be used for building brand image.
Mobile: high potential that is still under-exploited
The mobile phone is currently one of the most commonly owned personal items in the world, with forecasts indicating 3.25 billion users by the end of 2007.
Despite its many assets, mobile currently accounts for less than 1% of ad spending, even though investments in the medium increased by 75% between 2006 and 2007. Plus, spending on mobile advertising is very localised, with Japan accounting for 53% of all mobile investments and the United States for 27%.
It is true that for mobile ad revenue to increase there needs to be a rise in the rate of 3G/3G+ equipment and in actual consumption, which will undoubtedly be spurred by better pricing policies and the launch of services tailored to mobile browsing. As a result, the mobile internet user base is still too small to attract a large number of advertisers, or to justify massive spending.
In addition, the mobile advertising value chain is currently in the early stages of construction, with new entrants coming on the scene and undermining veteran players’ role in the mobile data services value chain. A variety of cooperation and revenue sharing models are being tested by the players involved but, "until the players reach an agreement that is fair to one and all, the mobile advertising market will not take off" analyses Florence LeBorgne.
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