While they regard digital media as viable, the majority of industry leader respondents to an American Advertising Federation (AAF) survey have some reservations about their own and corporate America’s current ability to fully capitalize on the potential of online advertising. Sixty-three percent of respondents believe that Fortune 500 companies are “generally behind the curve when it comes to online ad strategy.” And 58 percent said that they are personally “struggling simply to manage existing online efforts, let alone stay ahead of the curve.”
At the same time, feedback showed that 91 percent of those surveyed are bullish on digital marketing, characterizing the online media environment as being “empowering to advertisers, allowing the ad industry to shape its own development.” Digital media’s return on investment (ROI) was also recognized by respondents, with 42 percent citing paid search as offering the highest ROI platform.
But there are some reservations. Advertising executives find blogs a riskier, less effective advertising vehicle than user-generated content sites such as MySpace, YouTube and Facebook. Sixty-two percent stated that “blogs are too risky to advertise on due to lack of predictability of the editorial content,” while only 53 percent agreed with the same statement about user-generated content. Despite these concerns, an overwhelming majority said advertisers “should exploit the viral marketing opportunities” of user-generated sites and, to a lesser degree, blogs.
Other findings of the survey, which was prepared by Atlantic Media Company for the AAF, included:
- Online video has not yet had a significant impact on ad spend with television network upfront markets. Sixty-two percent of those that participate in TV upfront said online video did not have an effect on their spend with networks, and only 15 percent said online video decreased their network spend.
- Advertising industry leaders forecast expanded ad budgets across online media as a whole. Average spending on online advertising, as a percentage of the total media budget, is anticipated to increase from 15 percent in 2005 to 20 percent in 2006, and forecasted to reach 32 percent by 2010.
- New media platforms will get only a small percentage of online budgets next year, with social media and video getting the top percentage of spend.
- Paid search is set to increase from nine percent of the online budget in 2005 to 11 percent in 2006 and 23 percent in 2010.
- Display advertising is set to increase from 22 percent in 2005 to 28 percent in 2006, but will decrease by over half to 13 percent in 2010.
- Rich media will increase from 11 percent in 2005 to 13 percent in 2006 and 18 percent in 2010.
- And the top five most successful digital media campaigns over the last year were 1) Burger King; 2) Apple and Verizon (tie); 4) Volkswagen and 5) Axe.
The AAF Survey of Industry Leaders on Digital Media Trends was released last week during the recently concluded AAF National Conference 2006 in San Francisco. A total of 140 advertising industry leaders responded to the survey. They were spread across agency (23 percent), media (28 percent), client (7 percent) and other (22 percent, composed mostly of consultants and researchers) sectors. Sixty percent have worked in the advertising industry for more than 15 years, and 30 percent for 25-plus years.