Research shows a skew towards digital advertising among younger consumers in the UK. Over 40% of 14- to 17-year-olds believe that digital ads have greater influence than traditional TV or print ads.
Mobile advertising is on fire.
According to a report released today by the Interactive Advertising Bureau, mobile ad revenues have increased by 92 percent in the last year, rising from $344 million in Q2 2011 to $661 million in Q2 2012.
Digital advertising revenues had an increase of 14 percent in the first six months of 2012, growing from $14.9 billion in 2011 to $17 billion in Q2 2012. Although it’s interesting to note that 73 percent of digital advertising dollars are spent by 10 ad-selling companies, and the remained is spread across approximately 75 other companies.
In spite of the rapid growth of digital and mobile advertising, it’s search that’s on top, accounting for 47 percent total digital revenues, totaling $4.1 billion.
Here’s a breakdown of the data:
Historically search has retained the largest share of advertising revenues, but as the chart below shows, even though mobile’s the youngest format, it had the largest percent revenue between 2010 and 2012.
The effectiveness of Facebook ads has always been a big question-mark, with some data suggesting that the ads just don’t perform well.
According to Sharon Terlep, Shayndi Rice, and Suzanne Vranica of the Wall Street Journal, GM decided to pull the ads after meeting with Facebook executives and coming away unconvinced that they were effective.
GM currently spends $40 million a year on its Facebook presence.
Importantly, however, only $10 million of that spending goes went to Facebook.
The other $30 million goes to pay ad agencies and others to create content for Facebook and maintain GM’s pages and presence on Facebook.
In other words, GM has just killed the only part of its Facebook advertising presence that it was paying Facebook for.
Here’s the key section of the WSJ article:
Asked about the move, GM marketing chief Joel Ewanick said the auto maker, “is definitely reassessing our advertising on Facebook, although the content is effective and important.” Content refers to the unpaid Facebook pages many companies use to promote their products.
GM, started to re-evaluate its Facebook strategy earlier this year after its marketing team began to question the effectiveness of the ads. GM marketing executives, including Mr. Ewanick, met with Facebook managers to address concerns about the site’s effectiveness and left unconvinced advertising on the website made sense, according to people familiar with GM’s thinking.
Importantly, GM’s skepticism about Facebook is not due to a skepticism about digital advertising overall. GM spends about $300 million a year on digital brand advertising–just not on Facebook.
The growth of Facebook’s advertising business has slowed sharply in recent quarters, and the business achieved growth of only 37% year over year in Q1.
Advertiser skepticism may be one reason for this.
Although some people are convinced that Facebook will eventually be a bigger company than Google, there is very little evidence to support this contention. At the same time, there is much to suggest that this conclusion is simply unwarranted:
- Facebook is growing significantly more slowly than Google was at this stage of its development
- Advertising on Facebook, however well-targeted, is like advertising on walls at a party (people are there to socialize, not buy stuff). Advertising on Google, meanwhile, is advertising to people who have explicitly expressed interest in your product (See: “Like Hell Facebook Is Killing Google“)
Facebook just rolled out a suite of new impressive-looking ad products, which will include large ads in users’ news feeds. These new units seemed to be well-received by advertisers, at least to the extent that they were excited about hearing more about them.
But GM appears to have gone to the trouble to hear a lot about them–and still came away unimpressed.
The loss of a $10 million deal obviously won’t dent the ~$5 billion of revenue Facebook is expected to generate this year. But the loss of lots of clients like GM will begin to dent it. And for a company whose growth rate is already decelerating, there’s no way this can be construed as good news.
It’s been a little while since we’ve rolled out a Boutique Call post, but since the category seems somewhat wide open at this point, we’ll let you know that Shaz Sedighzadeh has started up a new operation called The Supply.
Sedighzadeh set up the new shop, which is being dubbed as a “a resource representation entity for digital and creative talent,” following a two-year stint as a digital producer at CP+B, where he helped produce work for Old Navy, Coke Zero and Microsoft Windows. Prior to Crispin, the new entrepreneur spent a few months on the digital production side at Tool of North America.
Want an explanation of what The Supply does? Well, regarding his new operation, here’s a statement from Sedighzadeh, who lives in Denver but shuttles between NY and LA often: “The world of traditional staffing, simply matching keywords on a resume, has been a working model for some time, and may continue to be in some capacity. But in the digital advertising world today, things are shifting way too fast to solely be supported by the standard candidate sourcing methods. Talent specialists and reps now need to think like experienced digital producers and strategists; they need to ‘get it’, knowing what the project/campaign consists of, what type/level of specific talent is needed, matching resources with the timeline/budget, identifying what design aesthetic needs to be applied, whether it’s a job for a vendor or a couple of freelancers, and the list goes on.”
New Career Opportunities Daily: The best jobs in media.
One thing to note, says Herman: “With Facebook only now starting to monetize their platform, you can start to see how big an impact they could have on the dominance of the digital advertising landscape.”
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Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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