Earlier this year, PricewaterhouseCoopers predicted that increases in online ad spending would be driven by activity in the tech sector as well as retail. As we move through 2012, with online ad revenue growing a solid 14% over last year, pharma and healthcare appears to be the most active vertical. And, marketers preferences for specific formats show that we can expect more interest in performance-based pricing.
While mobile only accounted for 5% of online ad spending last year, it has jumped to 8% of spending this year. This growth has been at the expense of formats like classifieds which now stands at 7% of digital instead of 21.5%, last year’s figure. However, actual spending on classifieds has been flat this year. Email has seen a year-to-date spending drop but that may change as the holiday season rolls around and retailers send out their campaigns to entice loyal customers to buy gifts. Search continues to own the online market with 47% of all spending, or $8.1 billion, going to that format through June of this year.
Performance-based ads jumped to 67% of pricing formats while hybrid models shrunk to 2% and impression-based (CPM) remains at 31% of the total spending. Over the past several years, performance-based advertising has climb steadily while the other pricing models have declined, a trend that underscores marketer interest in ROI information.
Retail is still the largest vertical for online ads with $3.4 billion spent through the first half of this year. Auto marketers remain another top category of online ad spending with a $2.2 billion outlay. The next highest vertical in online ad spending is financial services which also spent $2.2 billion. Together, financial services and auto account for 26% of the online ad market. Telcom rounds out the top 4 verticals as players in this vertical spent $2.1 billion for the first part of 2012. However, analysts note that the growth story in online advertising this year is all about pharmaceutical and healthcare. The 45% increase by companies in this sector brought the burn rate to $1.1 billion through mid-year and accounted for 6% of online ad spending. The other fast growing vertical, entertainment, spent $729 million through the first half of this year.
This trend suggests that industries who have been slower to move to the online market are now focusing on the format in a big way.[Source: IAB Internet Advertising Revenue Report. IAB.net. 2012. Web. 23 Oct. 2012]