As you continue to implement all of your carefully thought out 2017 plans for your digital advertising, let’s take a step back and think about what new realities all marketers and advertisers need to know, as part of the launch of our new e-book.
Digital advertising continued to grow in 2016, increasing by 20% year over year, and is predicted to grow by another 18% in 2017 to reach $229 billion. Much of this growth is attributed to the explosion of mobile advertising (which jumped from 44% of all digital ads globally in 2015 to 56% in 2016) and the dominance of Facebook and Google.
The $229 billion in advertising will be almost entirely split into two large buckets: search advertising, with $104 billion, and display advertising — a broad category that includes banner ads, all video ads, and native ads on platforms like Facebook — with $108 billion (eMarketer).
The companies that have proved their ability to personalize advertising on mobile platforms are dominant today. This includes Google and Facebook, but also other platforms that focus on how to integrate CRM-based data as well as other anonymized identity data with advertising.
An analysis of the new IAB/PwC “Internet Ad Revenue” report shows that 103% of the industry growth in the United States in the first half of 2016 came from Google and Facebook. Yes, that means that the rest of the digital advertising market actually shrank by 3%, despite the 20% growth of digital advertising overall.
Bottom line? In 2016, Google and Facebook accounted for $41 billion in U.S. ad revenue, or 58% of all digital ad revenue in the U.S.
Next, let’s dive deeper into three key industries we cover in the e-book: Retail, Financial Services, and B2B advertising.
The retail industry continues to own the title of “biggest digital advertising spender” for yet another year, and looks to hold its position through 2020. In the United States, retail marketers will invest $18.2 billion in paid digital media advertising in 2017, a 14.8% increase over 2016 (eMarketer).
It’s also the largest mobile advertiser. The U.S. retail industry directed an estimated 67% of its digital ad spending to mobile advertising in 2016, up from 52% in 2015. With an estimated $10.1 billion as of 2016, retail will own 23.2% of total mobile ad spending in the U.S., the largest of any industry.
Retail is also the largest investor in digital video advertising. Retail advertisers spent $2 billion in the U.S. on digital video in 2016 — or 13% of all advertising (eMarketer). Additionally, in a 2015 survey, the IAB found that 71% of retail advertisers will shift money from TV to support digital video.
Finally, retail, and especially e-commerce, has always been one of the industries most affected by search advertising. More than half (51%) of all retail ad spending in the United States today is spent on search advertising, for a total of $8 billion, according to eMarketer. Because a search often directly shows purchase intent (for example, “size 8 strappy black heels” or “new all-mountain skis”), Google has built its entire search business on matching that purchase signal to advertising.
In 2017, the United States financial services industry will spend $10.1 billion on digital advertising, a 13.1% gain from 2016, according to eMarketer. That means this industry is the third-largest advertiser in the United States, trailing only retail and automotive. These eye-popping numbers repeat in most other countries. In Australia, the U.K., and Germany, financial services digital advertising is the fifth-largest industry, consuming between 8% and 12% of all media ad spend.
How customers interact with financial services is undergoing a second major shift right now. In the first shift, customers started engaging with their financial institutions online. Today, many customers think of their brand relationships with a mobile-first mindset. Today, 71% of people in the U.K. and U.S. use banking mobile apps, according to SNL Financial.
It’s not just that customers use mobile apps, they also consider them key differentiators: 26% of people who switched banks last year did so because they “wanted a better mobile bank app experience.” Mobile advertising has followed suit. In 2016, 63% of the $8.37 billion in financial services digital advertising was on mobile.
The B2B landscape is changing at a rapid pace. It increasingly relies on sophisticated technologies and a comprehensive digital mobile strategy to be relevant to the modern buyer.
According to a Google study, 42% of B2B buyers use their phone in the business purchasing process, but only 3% of the digital marketing budget is allocated to mobile digital marketing (MarketingProfs). There is clearly a gap between how B2B companies get new leads and how their customers are making decisions.
Many customers have been slow to grasp the dominant role of mobile in reaching this new generation of B2B customers.