How to buy online advertising and the future of online advertising
Bloomberg -4.6% to 3.8% article “There’s been an explosion in the size and scale of digital advertising and advertising spending in the last two to three years,” says John Schafer, an analyst at Sanford C. Bernstein in Washington, D.C. “The growth in ad spending has been exponential.
So there’s a lot of excitement around the digital advertising space.”
Schafer says companies that have recently entered the market include Google, Facebook and Amazon.
But, he says, it’s also been a mixed bag for traditional media companies.
“The advertising industry is a very diverse space and it’s been a very mixed bag,” Schafer says.
“A lot of it has been on traditional media, with brands and media companies and others trying to make their own ad platforms that are a little bit different from traditional media.”
Schauer says it’s hard to say whether these companies will succeed in selling advertising on their own.
“But it is clear that advertisers are willing to pay more money for ads that are branded and it is also clear that brands are willing for the brands to have an easier time getting the ads into the minds of consumers,” he says.
“What’s different now is the ability of the brands themselves to be able to take on more of the responsibility.
So brands can say, ‘We are a part of this space, we want to be a part.’
They can also be part of an ecosystem that helps drive growth.”
But Schafer also points out that traditional media is not immune to the growth of the ad business.
“There are a lot more people doing it and the advertising business is bigger than ever,” he said.
Schafer adds that the industry is also seeing more companies entering the space, including social media giants such as Twitter, Facebook, Snapchat and Instagram.
Schauer also sees a potential for ad networks to benefit from a new model for how media is bought and delivered online.
“[A]s long as people are buying their ads online, the advertising network that has the most capacity to reach and monetize those advertisers will have a competitive advantage,” he explains.
Schaser says it will be up to the ad network to decide how much money to spend on digital advertising.
He says that if the network is able to make money from the digital ad, then that’s good for the company.
Schafer points out the potential for these networks to also compete with traditional media.
In an article for the New York Times, the head of the U.K.’s largest newspaper, The Times, Mark Thompson, predicted that digital advertising will make up a large portion of the newspaper’s advertising revenue in the next five years.
But he also warns that the traditional media business will still dominate.
Thompson says that the media industry is “not in the position of having the money to do it alone.
They’re just not able to.”
He says traditional media businesses have to compete for the ad dollars and also make sure that the advertisers can get the ads to their users.
Schauer believes the ad space will continue to grow.
“I think we’ll see it grow much faster than traditional media,” he predicts.
He says that it’s possible that the digital media market will eventually become as big as the print one.
But Schafer argues that it won’t happen in the same way as in the past.
“We’re already seeing a lot less digital ad spend than in the years after the dot-com bubble burst,” he points out.
“It’s very, very slow, and it may not be able at all to catch up with print advertising in terms of volume.”
He says the key is to keep the growth going.
“You have to keep buying new things and not give up,” he suggests.
“And I think we’re going to see a lot longer period of growth in digital advertising.”
Schaser adds that, even with all the hype around the ad market, there are still many unknowns in this space.
“In terms of the impact of advertising in the future, it really is hard to know how much is going to be impacted,” he notes.
“But what I’m sure of is that this is going be a really interesting and exciting time in the advertising space and the advertisers will be looking for new opportunities.”
Read more about the ad industry and advertisers at Bloomberg.com/ad industry