Digital advertising has become big business. From its inception just 15 years ago, advertisers will spend over £9bn on digital advertising in 2016. That’s a £600m increase over 2015 spending, a growth rate of over 16%. And this is not one-off – digital advertising has been growing at an annual rate of over 15% for more than a decade. It is so big that for the first time in 2016, spend on digital advertising will eclipse all other media combined!
The sectors using digital advertising should come as no surprise. Consumer goods tops the list with nearly 20% share of the overall spend. Transport, automotive, entertainment and media and finance round out the top 5, with retail and telecoms not far behind.
What may be a little more astonishing is how big the UK and Scandinavia are in the digital advertising market. Britain is large in both absolute and relative terms. It represents nearly 30% of the total European market and is 65% larger than #2 Germany! Annual per capita spend in the UK (ie. how much is spent on digital advertising per person) is €138, eclipsed only by Norway at €141. Denmark with €130 and Sweden at €105 round out the top 4.
So what’s behind the phenomenal growth? Several inter-linking factors are at work. The first is that digital is measureable. When someone clicks on an ad and spends time on the landing page, we can be pretty confident that the ad is having an effect. How can you do that with television, print or outdoor? Second, digital is inexpensive to produce and can be optimised. It costs a lot of money to produce a television commercial, and if it falls flat, the money is wasted. Whereas many different versions of a digital ad can be produced at a fraction of the cost. The advertiser can test them all and weight its spend to the versions that perform the best. That’s much harder to do with print because you can’t re-print today’s newspaper!
And finally, advertisers are able to target far more effectively with digital than with other media. Most websites serve a well-defined purpose and serve a particular audience. They provide advertisers far more granular data on their users than other media – how do you determine who saw my billboard? This allows the advertiser to position ads to groups that match their current customer profile and test new groups who may be interested in their products.
This is what makes DMOs attractive online properties. Audiences are well defined and the context is clear. This is valuable to direct advertisers, such as travel insurance, hire cars and accessories. But equally valuable to indirect advertisers who want to target the audiences who visit your sites.
The Visit Ad Network now provides a means for DMOs to capitalise on their brands, positioning and web assets. VAN provides the ability to aggregate volume for advertisers while giving DMOs peace of mind that only appropriate ads will appear on their sites.
We’ll follow-up next month with more information on how digital advertising is bought and placed, and who the big players in the market are. Until then, talk to your Account Manager about how you can sign up to the fastest growing Ad Network in Europe.