DMN3 Blog

2010 was a rebound year for advertising. While large advertisers led the way, the third quarter saw small and medium-sized businesses regain their confidence and jump back into advertising spending in a big way. If you are still sitting on the sidelines, your competition isn’t…

The increased ad spending by small and medium-sized businesses helped advertising spending gain momentum in the third quarter of 2010. Kantar Media reports that, for the third quarter of 2010, spending on advertising rose 8.7 percent from the same period in 2009. This represents the largest quarterly increase since the fourth quarter of 2004. The third quarter ad spending increase followed growth in the first quarter of 5.1 percent and second quarter growth of 5.4 percent.

During the recession and its aftermath, advertisers had reduced spending in virtually all forms of media. During 2009 overall U.S. ad spending dropped 12.3 percent. Now things are looking up and conditions are widely perceived as improving. Consumer holiday spending only reinforced such optimism.

According to Kantar Media, television advertising enjoyed the largest gains for the specific media they track with an increase of 10.5 percent compared with the same period in 2009. Other media that performed well for the first three quarters, according to Kantar, were Internet display ads, outdoor ads and free-standing inserts.

Local newspapers continue their struggle with advertising revenue declining for the 20^th consecutive quarter. National and Spanish language newspapers did make some gains. Online advertising dollars now exceed newspaper print advertising spending, making it second only to television advertising among measured media. Computer tablets like iPad may help daily newspapers turn around the decline of their advertising dollars. Only time will tell…

The biggest gainers in advertising spending were the automobile, telecommunications, financial services and food and candy categories.

Internet advertising and mobile advertising are growing rapidly in the financial recovery. The Interactive Advertising Bureau and PricewaterhouseCoopers report that Internet advertising in the U.S. increased in the third quarter of 2010  to a record $6.4 billion. Online ad revenue grew by 17 percent, up from its 13.9 percent growth in the second quarter.

Magna Global estimates that, when the numbers are counted, web ad spending for 2010 will hit $25.6 billion. eMarketer’s numbers are $25.8 billion which represents a 13.9% increase from 2009 and a record amount of online advertising spending. eMarketer expects growth to continue with double digit percent increases through 2014.

Online spending gains represent advertisers belief that Internet marketing and advertising is more targeted and offers a better ROI than most traditional media. Lager brand marketers still have plenty of marketing budget room to shift increasing dollars into online media. Small and medium-sized businesses are seeing easier ways to avail themselves of Internet advertising and in ways that suit their budgets.

Specific areas of online marketing spending that will experience major increases include mobile, social and online videos.

Mobile marketing and advertising spending will reach $790 million in 2010. The continued shift to smart phones by consumers will result in spending to increase to $3 billion by 2014, according to projections by BIA/Kelsey. The high profile entrance of companies such as Google and Apple has encouraged marketers to tap into this market. Expect mobile marketing and advertising to have its own line item in marketer’s budgets in coming years.

Social media ad spending was projected by eMarketer to hit $3.3 billion for 2010. That’s a 31 percent increase from 2009. That projection was in September so I wouldn’t be surprised if the actual number exceeds the $3.3 billion projected. eMarketer has had to increase its earlier projections as advertisers and consumers became more confident about the recovery.

Online video advertising will see rapid growth in 2011 and beyond. There has been a huge explosion of digital video ad inventory. 70 percent of advertisers responding to a survey by Break Media and Advertising Perceptions said that they were going to increase their spending on digital video in 2011.

PricewaterhouseCoopers is predicting that spending for online video will increase by 38.6 percent in 2011. That should keep the digital video ad inventory exploding for the near term.

The movement back into advertising spending by big and small companies alike should keep advertising revenues strong. It also means that those still sitting on the sidelines will find themselves at a competitive disadvantage very quickly.

Where do you stand on increasing your advertising and marketing budgets for 2011?