B2B spending on online advertising expected to rise in 2018

Estimates from eMarketer calculate B2B companies spent $4.07 billion on online advertising in 2017. In 2018, the spending is expected to increase 13 percent to 4.6 billion. Across the board, companies are pouring more money into technologies that allow them to place advertisements where their customers are. While traditional media still has a place in advertising, consumers have transitioned an increasing portion on their lives online and businesses have followed.

While the 13 percent increase in online advertising spending is in the double digits, 2018’s predicted spending growth is the lowest in recent history. The percent change in spending from 2014 to 2015 was the largest with 19.7 percent. However, the B2B industry has maintained an online advertising spending growth of roughly 16 percent since 2013.

US Digital B2B Ad Spending 2013-2018

 

 

 

 

 

 

 

 

 

 

When compartmentalized by technology, desktops/laptops and mobile have similar shares of the online advertising spending from U.S. B2B businesses. According to a study conducted by eMarketer, desktops and laptops took up $2.54 billion whereas spending for mobile devices was $1.53 billion. When analyzing B2B online advertisement buying budgets, AdWeek discovered they’ve grown by 111 percent over the last five years.

However, while online advertising has had double digit growth for years, many B2B businesses still prefer other traditional and time-tested methods of advertisement. Ytel, a communications company, conducted a survey which asked 2,000 B2B businesses their preferred outreach tool.

Online advertising was the least popular answer tied with direct mail at 7 percent each. Email was the most popular answer with 39 percent.

Dirxion online catalogs give B2B businesses another avenue in an omnichannel marketing approach and allows them to capitalize on the rise of the B2B e-commerce market. For B2B businesses with many catalogs spanning multiple departments of their company, Dirxion’s bookshelf feature organizes the individual catalogs on a central landing page and integrates cross-catalog searching. Existing e-commerce platforms can be integrated into the catalog or B2B businesses can employ the Dirxion order form feature to generate a request for a quote.

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More companies might compete against online advertising duopoly

Google and Facebook have long held a dominant share in the online advertising market. The two companies have some of the largest user bases in the world. Google now processes over 2 trillion searches per year and Facebook passed 2 billion monthly active users earlier in 2017, according to Statista.

But many ad buyers see that large user base as a disadvantage. Both companies dealt with controversy surrounding how advertisements are managed on certain sites and daughter companies. In response, many customers have adjusted their advertisement buying strategies. Many companies outside of the duopoly are seeing their revenue growing year-over-year.

Google and Facebook still account for 63 percent of all U.S. digital ad revenue. Of the remaining revenue, companies such as Microsoft and Oath claim nearly 12 and 11 percent respectively, according to eMarketer. Looking at the same piece of data, it’s apparent the majority of companies tracked by eMarketer have experienced some sort of growth in the share of online advertising revenue. For instance, Snapchat had a 0.2 percent share in 2015 which is expected to grow to 6 percent by 2019.

Amazon has also recently made a push into the online advertising market. Estimates from eMarketer predict Amazon currently holds a 7.3 percent revenue share of companies outside of the duopoly and is expected to reach 9.3 percent by 2019.

US Digital Ad Revenue

 

 

 

 

 

 

 

 

 

Reports from CNBC allude to Amazon making expansions on both their e-commerce searches and video services. EMarketer estimates Amazon is the 5th largest online advertiser in terms of revenue, right below Google, Facebook, Microsoft and Verizon.

Amazon currently allows businesses to promote their products in related searches but hopes to eventually give advertisers better data to allow for more precise demographic targeting. Outside of paid promotion search results, Amazon is exploring mobile advertisements, video advertising and their newly-released “Transparent Ad Marketplace” which allows customers to bid on ad space across the web.

“Amazon likes to talk about how 56 percent of product searches are coming through Amazon. It’s definitely a stat that causes advertisers to stand up.” –Diana Gordon, senior partner at Mindshare.

For e-commerce businesses, growing their websites through organic traffic is sustainable in the long-run, cuts costs that would be used to purchase advertising space and raises traffic at a higher rate than a PPC program would. Dirxion online catalogs offer SEO guide pages that involves indexing every page of the printed catalog. This practice helps boost the overall SEO of the online catalogs site. In addition, Dirxion online catalogs offer a variation of ad platform services for customers through widgets. The widgets, which come in a variation of sizes and implementations, can be either integrated into an existing advertising program or the customer can sell space directly to customers without having to use an external advertising service.

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2018 may bring new changes to the online advertising market

From the formation of stricter guidelines to a growing concern over fraudulent practices, online advertising went through a year-long adjustment period. Alongside record-breaking growth, the platform sought to settle into a sustainable format which delivers on promises to advertisers and customers alike. Estimates from eMarketer predict advertisers in the U.S. will spend almost $48 billion on online advertisements.

Customers are predicted to move away from a more open-market approach towards purchasing advertisements. For instance, it was reported earlier this year that global revenue lost to the fraudulent advertising method “spoofing” could potentially reach $16 billion by the end of 2017. In addition to potentially lost revenue, advertisers have had difficulties in recent years using large platforms such as Google, Facebook and their subsidiaries.

For years, such companies have held to the mentality that the web is too large to police; therefore, it’s hard to determine exactly where their customers’ ads will appear. In YouTube’s case, a daughter company of Google, multiple investigative reports and articles this year revealed advertisements were running on videos promoting hate speech or other illegal activities. For years, YouTube used to proudly display the volume of videos uploaded to their platform. Now at 65 years of video uploaded per day, that volume has become a challenge for YouTube to monitor and a warning sign to many advertisers.

“Taken together, the openness once touted by Google, Facebook, and Twitter has taken on a new, shall we say, less positive, meaning in the advertising world. The conversation there became about “brand safety,” and based on the steady string of stories this year wherein Google or Facebook got caught running ads in an “unsafe” fashion, neither company has given the marketing world confidence it has a real handle on the monster challenge of policing massive open platforms.” –Mike Shields, Business Insider

Many companies are returning to direct advertising buying, whether through digital or traditional platforms. Estimates from BIA/Kelsey predict local advertising spending in the U.S. will surpass $151 billion in 2018, a 5.2 percent increase from last year. Despite online advertising’s consistent growth, traditional media such as newspaper and radio, still account for 65 percent of all local advertising spending in the U.S, according to BIA/Kelsey.

Ad Spending

 

 

 

 

 

 

 

 

For e-commerce businesses, growing their websites through organic traffic is sustainable in the long-run, cuts costs that would be used to purchase advertising space and raises traffic at a higher rate than a PPC program would. Dirxion online catalogs offer SEO guide pages that involves a process of indexing every page of the printed catalog. This practice helps boost the overall SEO of the online catalogs site, as well as increase the likelihood of someone finding a catalog page when searching a company’s brand name. In addition, Dirxion online catalogs offer a variation of ad platform services for customers through widgets. The widgets, which come in a variation of sizes and implementations, can be either integrated into an existing advertising program or the customer can sell space directly to customers without having to use an external advertising service.

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Google and Facebook duopoly force change in online advertising industry

Facebook and Google provide high ROI and easy-to-manage online advertising options for thousands of businesses but have put the pressure on advertising agencies of all sizes to innovate. The duopoly is now predicted to attract 60 percent of all online advertising spending in 2017, according to eMarketer.

87 percent of the $26 billion in revenue this quarter from Alphabet, Google’s parent company, came from online advertising. Facebook reached similar numbers netting $9.3 billion this quarter with 98 percent of that coming from online advertising, according to Wired. Other large tech corporations haven’t achieved such success as Twitter reportedly lost two million high-value users for advertisers and Snap’s stock went on a downward slope since going public.

Digital Ad Revenue
Google and Facebook have positioned themselves at the front of this demand curve by being the ad publishers with some of the best-in-class targeting abilities in the digital ad market. With Facebook being able to provide targeting based upon consumer interests and Google capitalizing on where those consumers have been through searches, both companies ensure their lead among digital ad publishers.” –Monica Peart, eMarketer senior director of forecasting

Advertisers and ad agencies are looking for new ways to combat the duopoly, mostly by questioning current advertising practices and techniques. Many marketers are pushing for fee reduction on agency services, which would give some agencies a competitive edge. Facebook ads currently cost nearly 25 percent more than they did a year ago. But Facebook and Google both benefit from their large user base, allowing for highly-detailed analytics reports and competitive targeted ad targeting technology.

The growth of the online ad agency has brought fraudulent online advertising practices to light. Also known as “spoofing”, fraudulent online advertising practices use third-party ad exchange websites to sell advertising space directly to high-value sites. However, the ad would actually lead to a low-value, low-traffic site. In addition, Facebook recently banned certain online advertisers who used “cloaking methods” which send users to unauthorized websites that passed through Facebook’s screening process.

For e-commerce businesses, growing their websites through organic traffic is sustainable in the long-run, cuts costs that would be used to purchase advertising space and raises traffic at a higher rate than a PPC program would. Dirxion online catalogs offer SEO guide pages that involves a process of indexing every page of the printed catalog. This practice helps boost the overall SEO of the online catalogs site, as well as increase the likelihood of someone finding a catalog page when searching a company’s brand name. In addition, Dirxion online catalogs offer a variation of ad platform services for customers through widgets. The widgets, which come in a variation of sizes and implementations, can be either integrated into an existing advertising program or the customer can sell space directly to customers without having to use an external advertising service. 

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ESPN changes audience metrics to match shift toward online advertising

ESPN’s restructuring phase continues as their focus continually shifts towards the presence of digital audiences and online advertising in mind. ESPN, owned by Disney, will now track TV and digital viewership from Nielsen Total Audience as one metric, as reported by Business Insider. As the first media company to sign such a deal, it will take ESPN three weeks to receive the data from Nielsen.

Online advertising has yet to find solid ground as large corporations have yet to discover if their platforms can be both effective and simultaneously deliver a high ROI for online advertisements. Because of this, marketers and advertisers have yet to abandon TV advertising en masse. Yet online advertising spending continues to grow. National TV ad sales have dropped 1.4 percent on average in 2017 while U.S. digital advertising alone is expected to rise by 14 percent, according to media research firm Magna.

By tracking digital and TV viewership as one unit, ESPN can treat the two as one unit, effectively changing the way advertising is sold on digital platforms. ESPN previously offered different services for advertisers depending on the platform. Combining the two metrics will increase the accuracy of analytics reporting for ESPN, but according to Michael Zimbalist, Chief Marketing Officer of Simulmedia, “with each passing day, TV advertising becomes more and more like digital. The reason is data.”

“Zimbalist shares a study released by Gayle Fuguitt, CEO and president of the Advertising Research Foundation, which found that out of 3,200 ad campaigns, TV advertising was ‘the most effective vehicle for driving ROI, and adding digital to a TV campaign yields a 60% kicker effect.'” – Forbes, 2016

Advertisers continually search for avenues in which their target audiences participate and spend their time in. As consumers spend more time consuming media online advertisers have followed suit by allocating more and more of their budgets into digital platforms. Companies that develop precise targeting capabilities for advertisers, also known as “ad techs”, now spend more money developing for digital mobile display than any other platform. Such spending is expected to top $20 billion by this year and reach roughly $38.5 billion by 2020, according to Business Insider.

US Programmatic Revenue

 

Dirxion online catalogs offer a variation of ad platform services for customers through widgets. The widgets, which come in a variation of sizes and implementations, can be either integrated into an existing advertising program or the customer can sell space directly to customers without having to use an external advertising service.

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Fraudulent online advertising practices exposed, e-commerce businesses potentially affected

The online advertising market continues to undergo radical changes as it finds its role within e-commerce and the Internet. Anti-trust legislation, market duopoly’s and the role of organic searches have all been under debate within the last year. Most recently, fraudulent advertising techniques have come to light, which has created issues for buyers, sellers and hosts of online advertising of all sizes.

Market growth for online advertising has increased by billions of dollars annually. Advertisers globally spent a collective $170 billion in 2016, according to Ironpaper. With the increasing amount of advertising spending globally, fraudulent advertising practices are taking larger shares of potential revenue. Global revenue wasted on fraudulent traffic might reach over $16 billion in 2017, as per reports from Business Insider. That cut is only expected to increase, with recent projections predicting as much as $50 billion within the next 10 years.

 

Fraudulent online advertising could come in the form of bots delivering artificial views on a purchased ad or sellers buying cheap ad space on low-traffic websites and listing it as a premium spot on a highly-populated website. Ad exchange websites list potential online ad space, often at a discount compared with major companies like Facebook and Google. Some scammers place ad listings for popular websites in what could appear to some as being too-good-to-be-true. But some unsuspecting buyers might pay for this ad space, thinking their ad would appear on a popular website when, in reality, it’s appearing on a low-traffic site that the scammer bought. Also, Integral Ad Science estimates 9 percent of online advertising bought through programmatic channels (essentially using machines to buy advertising space as opposed to human negotiation through trusted avenues) is fraudulent.

Google’s solution, ads.txt, allows web publishers to clearly outline who is and isn’t allowed to sell advertising space on their website. With participation from web publishers and buyers actively making an effort to buy from authorized sellers, fraudulent advertising practices could be curtailed. The incentive to purchase space through ad exchange services has been higher in recent years as Facebook and Google have become the dominant players in online advertising. E-commerce businesses who wanted to increase traffic participated in “Pay-Per-Click” programs, allocating a monthly budget to achieve a certain number of impressions. The cost per click (CPC), however, rose as the platforms became more popular and competition rose for popular keywords. Businesses were drawn to ad exchanges that promised high-traffic ad space for a fraction of the cost.

For e-commerce businesses, growing their websites through organic traffic is sustainable in the long-run, cuts costs that would be used to purchase advertising space and raises traffic at a higher rate than a PPC program would. Dirxion online catalogs offer SEO guide pages that involves a process of indexing every page of the printed catalog. This practice helps boost the overall SEO of the online catalogs site, as well as increase the likelihood of someone finding a catalog page when searching a company’s brand name. In addition, Dirxion online catalogs offer a variation of ad platform services for customers through widgets. The widgets, which come in a variation of sizes and implementations, can be either integrated into an existing advertising program or the customer can sell space directly to customers without having to use an external advertising service.

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News outlets pursue online advertising rights with Google and Facebook

At the current state of the Internet advertising market,Google and Facebook have established what many consider a duopoly. While the online advertising space has grown exponentially, netting $72.5 billion in 2016, 99 percent of that growth was attributed to Google and Facebook combined.

According to Mashable, the two tech companies generate 70 cents/dollar spent on advertising, with the remaining 30 cents divided among hundreds of other media companies. In response to this dynamic, a newspaper industry trade group called The Alliance will attempt to earn an antitrust exemption from Congress to collectively negotiate with the two firms. The Alliance ranges from national newspapers such as The New York Times to regional papers like The Star Tribune in Minneapolis.

In the past, both Google and Facebook have made promises and enacted new policies in order to bolster newspapers in the online space. Google’s new stand against subpar online advertising and automatically blocking ads on Google Chrome will give readers a way to directly pay news outlets instead of blocking their ads. Facebook’s new Instant Articles features will also reportedly offer a paid subscription model.

The dynamic between large media outlets and the digital advertising networks has yet to take its full form. Newspaper publications, which have long relied on their own distribution networks to deliver their content to readers,are now heavily relying on digital advertising to generate revenue, as subscriptions and physical advertising numbers fall. Publications are now somewhat dependent on these platforms to help uphold quality journalism. Facebook most recently implemented a fact-checking system to filter out and flag potential “fake news” to users. In a similar manner, Google and Facebook rely on the strength of its participants but, because of the strong duopoly in the market, can pit publications against each other.

Google’s previous altercations with antitrust legislation and allegations could alter the outcome of The Alliance’s campaigning with Congress. Most recently, Google found themselves battling a potential $2.7 billion fine based on allegations of “abusing dominance” in the search market by EU regulators. The changing dynamic of the digital era isn’t retained exclusively within nationwide newspapers.

Local publications have also begun to support their own CMS sites as well as third-party e-Editions. The latter are digital replicas of the print product, built from PDFs and turned into an interactive format that lives on the newspaper’s website. Dirxion allows customers to lock their e-Editions behind a subscription login, allowing only subscribers to access the print pages. Widgets can also be added to e-Editions, giving Dirxion customers the tools to independently sell advertising space to businesses within their local market.

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ESPN layoffs an indicator of shift toward online advertising

Today, ESPN continued to restructure its organization, laying off about 100 on-air personalities and writers, a huge chunk in personnel salary. Its problem is rooted in a deep investment in TV cable deals that don’t expire any time soon, even though sports fans are cutting the cable cord and finding other ways to watch live events.

Over the past few years, ESPN has lost over 10 million subscribers, according to the New York Times. That loss in subscribers in conjunction with big payouts for rights fees has resulted in an ominously shiny bubble. And one of the biggest revenue streams for any TV network is advertising revenue, something directly correlated with viewership.

Global Ad Spend

 

Consequently, advertising dollars are shifting toward online advertising. Last year, eMarketerprojected that U.S. digital ad sales would surpass traditional TV for the first time. It’s a massive shift in the way money is being spent and how advertisers want to interact with consumers. It’s something new that doesn’t return an investment in live TV events whose rights are bought through cable deals — ESPN’s bread and butter that is getting soggy and molded.

According to that same report, advertisers will have spent $72.09 billion on U.S. digital advertising by the end of 2016, while TV spending will account for just less, $71.29 billion. It gives digital a 36.8 percent share in media ad spending, which is 0.4 percent higher than TV’s share.

This makes sense because ESPN’s 10 million less subscribers have gone somewhere, and all signs point to online platforms that continue to grow. Consumers are streaming shows from mobile devices and consuming news on the subway rather than on the couch.

This development is good for Internet-based platforms, including online publications, considering a variety of advertisements can be plugged into such applications. As time passes, newspapers will be asked to provide interstitial ads in their e-Editions; online catalogs will be asked to provide cross-platform advertising between manufacturer and distributor; and interactive yellow pages will continue to squeeze out online advertising revenue through banners and videos.

It will be increasingly important to operate within platforms that are flexible and custom, in order to service the wide range of advertising networks served online. An HTML5-based solution will be more capable of this than anything still based in Flash.

ESPN’s story is hard to have anticipated when these major cable deals were struck; however, its certainly an indicator of why digital and online advertising has become so important.

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