Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Abbreviations and terms
- Abbreviations
Executive Summary
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- Ad spending shifting dramatically toward online sector
- Pricing and evolving online behavior drive change in market dynamics
- Search ads remain dominant as banner and video ads increase
- Google seeks growth through display ads, social networks, and strategic acquisitions
- Bing and Facebook deepen integration
- Advertising companies seek new metrics to prove their worth
- Younger consumers are largest audience of online advertising
- Facebook ads boast highest relevance
- Protection of privacy is a significant obstacle
- Google dominates search advertising but Bing is growing
- Mobile advertising grows rapidly despite negative attitudes
- Online video commercials must overcome consumer antipathy
Insights and Opportunities
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- Advertisers must address privacy concerns with clarity and consistency
- Clear, easy-to-understand controls build trust
- Consistency is key to building a reputation
- Geographic targeting is the next revolution
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- Figure 1: Interest in local websites, by year, May-Sep 2005, May-Oct 2006, Jul-Nov 2007, Apr-Dec 2008, Apr-Dec 2009 and Apr-Dec 2010
- Building relationships with specific ad servers can build brand identity
- Emerging consumer segment may be moving away from TV
Inspire Insights
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- Inspire Trend—“Secret Secret”
Competitive Context
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- Spending on traditional media expected to decline in 2011
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- Figure 2: U.S. advertising expenditures, by media type, 2009-11
- TV still a potent force
- Newspapers continue decline but more slowly
- Online newspapers try new models
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- Figure 3: U.S. advertising expenditures, by media type, 2009-10
- Shift to online consumption most marked among youngest respondents
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- Figure 4: U.S. media consumption changes, by age, April 2011
- Daily local deal sites test a new paradigm for online marketing
- Deal sites offer alternative for brand building
- Mobile is a rapidly expanding means of online access
- Platforms for in-app advertising
Market Size and Forecast
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- Internet advertising rebounds strongly
- Market size and forecast
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- Figure 5: U.S. internet advertising revenues, at current prices, 2006-16
- Figure 6: U.S. internet advertising revenues, at inflation-adjusted prices, 2006-16
- Fan-chart forecast
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- Figure 7: Fan chart forecast at 50-95% confidence levels, 2006-16
Market Drivers
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- Internet advertising benefits from general rebound in ad spend
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- Figure 8: U.S. total major media advertising spending, 2009-12
- Americans spend more time online, especially on social networks
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- Figure 9: Top sectors, by share of time spent online, June 2010
- Online supply increases, but diminishing effectiveness pushes prices down
- Growing online video consumption drives internet ad growth
- Growth aided by broadband and internet-connected TVs
- Online video is superior to traditional video channels in delivering targeted ads
Segment Analysis
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- Video and banner ads increase share as search saturates
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- Figure 10: U.S. new media advertising expenditures, by type of online ad, 2009 and 2010
- Non-tech marketers increase share of spending
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- Figure 11: U.S. sales of online advertising, by sector, 2010
Leading Companies
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- Overview
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- Figure 12: U.S. internet advertising revenue share of leading companies, 2009 and 2010
- Display advertising increasingly important
- Social recommendations to increase relevance
- Strategic acquisitions to boost inventory and reach
- Expanding the client base
- YouTube (Google)
- Strategies to increase user engagement
- Google TV
- Yahoo
- Yahoo differentiates on ad size and layout
- Video may also play a larger role
- Microsoft
- Bing-powered searches make steady gains
- Bing adds Like button to leverage social networks
- Loyalty rewards encourages Bing usage
Innovations and Innovators
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- Targeting integrates offline consumer information
- Location-based advertising on the rise within mobile channel
- Hybrid marketing strategies incorporate user-generated content to boost engagement
- New efforts focus on better standardized metrics of effectiveness
- Online advertisers create and refine new metrics to prove their worth
- Video sites pioneer features that refine targeting
Penetration
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- Online reach is substantial but still lags behind traditional media
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- Figure 13: Frequency of ad consumption, April 2011
- Age most important determinant in reach of online advertising
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- Figure 14: Frequency of ad consumption, by age, April 2011
- Youngest users most likely to engage, but also to leave
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- Figure 15: Frequency of abandonment of online videos, by age, April 2011
- Games a small but growing niche
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- Figure 16: Consumption of in-game advertising, by age, April 2011
Relevance
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- Facebook ads trump search in relevance
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- Figure 17: Relevance of online advertising, April 2011
- Under-35s find online advertising more relevant
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- Figure 18: Relevance of online advertising, by age, April 2011
Search Engine Usage
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- Google continues to dominate the search market
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- Figure 19: Search engine usage during product research, April 2011
- Youngest respondents show stronger preference for Google
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- Figure 20: Search engine usage during product research, by age, April 2011
- Google’s lead is greater among highest earners
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- Figure 21: Search engine usage during product research, by household income, April 2011
Attitudes Toward Search Engines
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- Respondents loyal to search engines and do not recognize search ads
- A quarter of respondents begin on search home pages
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- Figure 22: Attitudes toward search, April 2011
Online Video Ads
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- Older users particularly dislike being forced to watch ads
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- Figure 23: Reasons online video ads are not watched, by age, April 2011
Mobile Advertising
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- Younger respondents vastly more receptive to mobile advertising
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- Figure 24: Attitudes toward mobile advertising, by age, April 2011
Privacy
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- Majority of respondents uncomfortable with online information collection
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- Figure 25: Comfort with online and mobile tracking, April 2011
- Older respondents more concerned about all types of online tracking
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- Figure 26: Comfort with online and mobile tracking, by age, April 2011
- Women especially concerned about collection of personal information
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- Figure 27: Discomfort with online and mobile tracking, by gender, April 2011
- Highest-earning respondents especially concerned about personal info
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- Figure 28: Discomfort with online and mobile tracking, by household income, July 2011
Impact of Race and Hispanic Origin
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- Asians and blacks more receptive to some types of online advertising
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- Figure 29: Frequency of ad consumption, by race and Hispanic origin, April 2011
- Asians more sensitive to use of time
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- Figure 30: Reasons online video ads are not watched, by race and Hispanic origin, April 2011
- Asians more likely to comparison shop using value-oriented search engines
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- Figure 31: Search engine usage, by race and Hispanic origin, April 2011
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- Figure 32: Attitudes toward search, by race and Hispanic origin, April 2011
- Asians receptive to mobile advertising that is discount-oriented
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- Figure 33: Attitudes toward mobile advertising, by race and Hispanic origin, July 2011
Cluster Analysis
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- Cluster 1: Unengaged
- Characteristics
- Opportunity
- Cluster 2: Open Sharers
- Characteristics
- Opportunity
- Cluster 3: Smart Searchers
- Characteristics
- Opportunity
- Characteristic tables
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- Figure 34: Internet advertising clusters, April 2011
- Figure 35: Frequency of ad consumption, by cluster, April 2011
- Figure 36: Attitudes toward search, by cluster, April 2011
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- Figure 37: Comfort with online and mobile tracking, by cluster, April 2011
- Demographic tables
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- Figure 38: Internet advertising clusters, by gender, April 2011
- Figure 39: Internet advertising clusters, by age, April 2011
- Figure 40: Internet advertising clusters, by household income, April 2011
- Figure 41: Internet advertising clusters, by race and Hispanic origin, April 2011
- Cluster methodology
Custom Consumer Groups
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- Different search engine users have different search behaviors
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- Figure 42: Search behavior, by preferred search engine, April 2011
- Rural respondents more concerned about privacy
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- Figure 43: Privacy concern, by urban-rural status, April 2011
- Larger households consume more advertising
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- Figure 44: Frequency of ad consumption, by household size, April 2011
- Men with children find all kinds of advertising most relevant
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- Figure 45: Relevance of ads, by gender and presence of children, April 2011
Appendix—Other Useful Consumer Tables
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- By age
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- Figure 46: Method of internet search, by age, July 2011
Appendix—Trade Associations
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