Ads up: Can digital advertising surpass the pack?

Luke Parker
Ads up: Can digital advertising surpass the pack?

With millions of eyeballs glued to their computers, smartphones and tablet screens every minute of the day, the world of advertising is having to creatively adapt to reach its online audience.

A new Advertising Expenditure Forecasts report from ZenithOptimedia predicts global ad spending will reach US$523 billion this year, with Internet advertising the fastest growing segment at an annual growth rate of 17.1%.

Specifically, mobile Internet advertising is growing the fastest and is forecast to increase by 67% this year accounting for 20% of all Internet advertising. It is expected to climb to 25% in 2015 and 30% in 2016.

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Here in New Zealand, Kiwi businesses are moving with the times to get in front of potential consumers, spending $471 million last year on online advertising. This was up from $366 million the previous year and the steepest year-on-year growth of the main 5 advertising channels – television, newspapers, interactive online, radio and magazines*.

Our total advertising spend was $2.274 billion in 2013.

DDB New Zealand CEO Justin Mowday says New Zealand has adopted smartphones as fast as anywhere else in the world.

“Well over half the country has smartphones already. It was only five years ago no one knew what a smartphone was. Now there are a million kiwis that log into Facebook every week.”

He says they’re seeing an explosive growth in the number of SMEs wanting their own web presence in some form, whether a web page or portal.

“Google AdWords have experienced phenomenal growth as effective marketing tools for small to medium enterprises.

“We are seeing a recalibration of the industry with more options and more places that you can now spend your money to reach people. In the current environment there’s a rebalance of spend around press advertising, which is decreasing.

Newspapers around New Zealand were hit hardest last year with a year-on-year drop from $540 million to $494 million. Alternatively, business using television to advertise remained on top.

“Although we’ve seen some dip in TV viewership over the last 18 months, it’s still a cost-effective way to reach a mass audience here in New Zealand,” Justin says. “Television commercials are still powerful and relevant.  The emotion you can achieve via a TV ad is un-paralleled by any other medium without a doubt.

“Every medium has a place and a value. It depends on what your objectives are and what the brand is trying to achieve.”

For now, it looks like advertisers will continue to plough full steam ahead into the online space to produce results.

If this current trend continues in New Zealand through 2014, it's likely that online advertising will overtake newspapers to become the second, or possibly the biggest contributor to the industry.

* Advertising Standards Authority 2013 ad spend figures 

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Three reasons why online looks quite attractive right now

People behaviour:

People are spending large amounts of time online. Whether that’s through their desktop, laptop, mobile device or tablet, it’s now making up a significant portion of people’s time, energy and attention. If that’s where their attention is, that is where an advertiser wants to be.

Engagement and interaction:

Digital media and some other channels allow a two-way experience with someone rather than the old, more traditional ways of simply broadcasting your message at them. The online viewer has an interactive experience where they might click a button, “like” something, participate, comment, or share it.This means they have not only viewed the advertisement, but participating in it which means a stronger and deeper level of engagement. Then they’re much more likely to remember it and be compelled by it.

The ability to measure reach:

With other advertising, we rely on surveys, reported viewing, 15-minute time blocks or TV ratings to gauge reach. With online, you know down to the number of people who have viewed the ad, clicked on it, shared or liked it. It is very measurable. 

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