Streaming video advertising will see continued big growth -- increasing more than 60% to $5.6 billion next year.

The Williamsburg, Va.- based media researcher, Borrell Associates, says one of the keys to this continuing strong growth is less-expensive video tools, which can be used by small advertisers. It says two of every five video ad dollars will come from local advertisers next year, according to one report. Overall, online advertising will continue to outpace the U.S. ad market as a whole. Borrell says local online ad spending will gain 14% in 2011, to $51.9 billion from $45.6 billion this year. Targeted display advertising is expected to see a 60% increase to $10.9 billion overall. U.S. advertising spending will inch up less than 5% in 2011 to $238.6 billion. Just looking at local online spending, Borrell projects a gain in 2011 of 17.5%, to $16.1 billion from $13.7 billion in 2010. It says run-of-site display spending will decline nearly 14% to $8.2 billion next year for both local and national. Local run-of-site ads are estimated to decrease only 3% next year. National paid-search spending will sink 11% -- due to lower pricing and churn. On the other hand, local advertisers will increase paid-search revenues by 10%. Email ad revenues will grow 9% to $16.0 billion for national and local advertisers. National email marketers are contributing a major part of this growth. Online couponing will contribute strongly to online promotions, growing 10% of 2010 totals to land $24 billion next year. Online couponing will climb 14% to $9.1 billion in 2011.

6.7% of all US online ad spending to go toward social networks this year

Audience targeting is under fire from consumers, advocacy groups and legislators. Advertisers are spending bigger bucks on targeted campaigns, but brands remain wary of rousing consumers’ ire and growth is limited because of uncertainty about rules and regulations that could be passed soon.

The benefits of targeting are clear, according to an online study of 500 agencies, publishers and advertisers by AudienceScience and DM2PRO. More than 60% of agencies were able to boost client display ad budgets because targeted ads are more effective, justifying greater dollars.

Publishers benefit, too, from higher ad prices, the ability to deliver better ROI for advertisers and selling more inventory.

And advertisers, in return for those higher CPMs, get ads delivered to the right audience at the right time.

Still, agencies, advertisers and publishers alike are concerned about the possibility of legislation in the area. Most are not in favor of government action; the majority of advertisers and publishers and about one-half of agencies believe the most effective way to protect consumer privacy is through industry self-regulation. Fewer than one-third of respondents thought Federal Trade Commission regulations would be better, and under 10% were impressed with the idea of congressional legislation. But respondents seem to be paying lip service to the idea of industry self-regulation. The plurality of agencies, publishers and advertisers were unfamiliar with the major Interactive Advertising Bureau’s “Data Usage and Control Primer” initiative, and many who did know about it were indifferent. What’s more, most said they did not have any plans to implement the IAB/NAI information icon designed for targeted campaigns. More than 70% of agencies said they would not implement it, either because they were unaware of the icon or disapproved of it, along with 65% of advertisers and 62% of publishers. As the online privacy bill of Rep. Rick Boucher (D-Va.) looms large, and critics in the advertising industry complain that it would stifle spending, many of the players are still not ready to take the plunge and self-regulate effectively.

The Internet is poised to overtake newspapers as the second-largest U.S. advertising medium by revenue behind television, according to PricewaterhouseCoopers’ Global Entertainment and Media Outlook for 2010 to 2014.

The online ad business, excluding mobile ads, is set to expand to $34.4 billion in 2014 from $24.2 billion in 2009, according to the report, which PwC plans to release Tuesday.

Newspapers, meanwhile, continue to suffer from a decline in advertising revenue. According to numbers released by the Newspaper Association of America earlier this year, print advertising revenue dropped 28.6% in 2009 to $24.82 billion. The PwC report estimates that print advertising in newspapers will hit $22.3 billion by 2014. “Although the Internet did not fully escape the impact of the recession, its decline in the United States was much less severe than that of other advertising media,” the PwC report notes. Shifts in consumer behavior, potential for inventory on the Internet, and increased broadband penetration in the U.S. are key factors in PwC’s projections, according to David Silverman, a partner at PwC.

In 2005, the broadband penetration in U.S. households was at 34%. An estimated 64% of households now have a broadband connection. The study notes that the federal government’s allocation of $7.2 billion of the stimulus plan for the expansion of broadband services, as well as the increasing availability of triple-play packages, which bundle Internet service with television and telephone service, are catalysts for growth in U.S. broadband access. The report is particularly bullish on the growth of advertising across interactive media, video and email — predicting that this segment of the market will reach $6.6 billion in 2014 from $4.7 billion in 2009. Online TV is expected to propel this segment because it has limited ad inventory within a program, allowing online TV providers to charge premium rates. The mobile advertising market also is poised for growth as wireless networks are upgraded and more Internet-enabled smart phones hit the market. Mobile advertising in North America is predicted to quadruple from $414 million in 2009 to $1.6 billion in 2014, according to the report.

PricewaterhouseCoopers releases its Global Entertainment and Media Outlook yearly. Actual growth in 2009 was slightly higher than projected in last year’s outlook, a spokesman for the company said.

Online to take one-fifth of total ad spend by 2014

Rebounding rabidly from the global downturn, China saw media advertising revenue jump 11.7% during the first quarter of the year, according to new data from Mediabrands' MAGNAGlobal.

For the full year, total ad revenues should rise by 14.4% -- up from 8.2% last year -- to $21.2 billion, forecasts MAGNAGlobal.

"With a resurgence of foreign investment and employment, China's greatest challenge is not around recovery, but preventing hyper growth and speculation," according to the MAGNAGlobal report. "Exponential increases in real estate pricing have skeptics pointing to a bubble, and China is increasingly facing pressure to moderate growth of exports through a lift on its currency peg."

While TV continues to dominate the nation in terms of media share, growth is most pronounced in digital in China with strong activity happening around emerging media.

Magazines, newspapers, radio and outdoor are expected to continue their double-digit growth, MAGNAGlobal forecasts. As a result, by 2013, China's media economy will be the world's second largest.

Growth in TV -- up by 12.7% in 2010 to $8.4 billion -- is fueled by the rising popularity of regional satellite channels catering to niche tastes. However, increasing regulations and restrictions are restraining that growth.

However, TV faces increasing pressure from online entertainment sources -- while totals for television continue to rise, the medium loses share as a part of the advertising-supported media sector as growth is limited by the government's tight control over the medium.

Within digital - the fastest growing sector of China's media industry -- search is expected to grow 30.9% in 2010 to $1.6 billion.

Google's exit from China solidified Baidu's dominance over the Chinese search market, allowing the search giant to post 59.6% growth in the first quarter of the year.

"While the lack of competition created by Google's departure may hinder expansion of the medium in the short term, the Chinese government's own search engine initiative may prove to be a competitor greater than Google," according to the MAGNAGlobal report.

While other governments around the world have attempted to create competing search engines in the past without commercial success, the Chinese government is more likely to succeed given the vast resources and clout its state owned enterprises currently hold.

Separately on Monday, MAGNAGlobal predicted that German media suppliers will collectively generate 3% growth to about $20 billion this year -- a better than an average "new normal" year based on unprecedented government intervention and easier comparisons to last, during which German media supplier advertising revenue declined 9%.

As in many countries, search will continue to dominate display as the primary online ad platform in Germany with about $2 billion in revenue this year. Overall, online is Germany's fastest growing medium, and MAGNAGlobal estimates it will continue to grow at above market rates through the year. As a result, online will likely account for 20% of total supplier revenues.

Its use is exploding, but ad spending in the sector continues to be a blip on the radar for most brands

Social media use is exploding, but ad spending in the sector continues to be a blip on the radar for most brands.
 
Razorfish, one of the largest digital ad spenders, compiled data on its 2009 digital ad spending. It found that social media display advertising made up just 3 percent of its clients' budgets. Non-display in social media accounted for another 1 percent. The figures pale in comparison to the time spent online. According to comScore, U.S. Internet users spent 11 percent of their time online in 2011 on social media sites.
 
The spending figures reflect that, all the chatter about Facebook, Twitter and iPhone notwithstanding, online media is dominated by traditional vehicles: vertical sites, ad networks, portals and search accounted for 88 percent of buys. Vertical sites got the biggest share of spending, 31 percent. Search was next with a 25 percent share and ad networks received 20 percent. Other emerging media remain blips: mobile accounted for just 2 percent of Razorfish's spending.
 
Like other agencies, Razorfish has found social media is less of an ad medium and more of a platform for building communities. The spending doesn't take the form of ad buys but rather the labor to build a Facebook page and staff it to respond to consumers, said Jeremy Lockhorn, vp of emerging media at Razorfish.
 
"A lot of the display media in social media is very cheap," he said. "More importantly, a lot of the money going into social is people powered, like blogger outreach. You don't see that in the media spend."
 
More money will flow into social in 2010, but Lockhorn believes it will continue to be in the earned media space rather than paid.
 
Overall, Razorfish saw signs of an online ad recovery. After dipping by 13 percent in 2008, ad spending for clients rebounded to increase by 4 percent in 2009. Razorfish expects growth to pick up in 2010. The average CPM paid was between $7 and $8. The median was $5. Razorfish said it expects CPM prices to rise in 2010.
 
Search occupied less of the spending pie at Razorfish. In 2008, the agency spent 37 percent of client budgets there, but in 2009 that dropped to 25 percent. The shop attributed that to normally high-spending clients in financial services and health pulling back budgets. Plus, at one point last year, pharmaceutical firms took down their ads after the FDA sent out warning letters. The losses in those sectors weren't offset by travel and retail, where spending was flat.

Portals fell out of favor, with spending dropping from 16 percent to 12 percent overall. Ad networks continued to hold strong, increasing from 12 percent of spending to 20 percent. Ad exchanges, which only got going late in 2009, accounted for 2 percent of expenditures. Lockhorn predicted more money would flow through them in 2010.
 
Despite excitement over new interactive formats, the overwhelming bulk of Razorfish's spending (77 percent) remained in standard display units. Rich media accounted for another 15 percent, with video at 8 percent.
 
The report, compiled based on spending data and a survey of Razorfish's media department, reveals some interesting impressions of digital media. Google, despite its efforts to be more than "just search," isn't viewed highly in other areas. Razorfish's media planners gave it the highest marks on a four-star system for search, but doled out single stars in other areas, ranging from performance display to video to mobile.
 
Looking ahead, Razorfish's list of publishers to watch includes Facebook, mobile ad network Greystripe, Hulu, Pandora and, perhaps most surprisingly, MySpace. On the latter, Razorfish praised the News Corp. property for mining profile data for ad targeting.

In a tangible sign that perceptions of better times along Madison Avenue may start becoming a reality, a leading ad tracking service reported that advertising spending in major media rose in the first quarter, marking the first gain since the first quarter of 2008.

The gain, 5.1 percent compared with the first quarter of 2009, was the largest increase in ad spending since the first quarter of 2006, the ad tracking service, Kantar Media, a unit of WPP, reported on Wednesday morning.

Fueling the increase was significantly higher spending by marketing mainstays like Procter & Gamble, AT&T and Pfizer, as well as a big bump in the ad budget at General Motors.

“With the economy turning from recession towards growth, marketers appear to be more confident about a pickup in consumer activity,” Jon Swallen, senior vice president for research at Kantar, said in a statement, “and have increased ad budgets to support their brands.”

Thirteen of the 19 types of media tracked by Kantar experienced spending gains in the first quarter, the company reported, ranging from 1.5 percent for Spanish-language magazines to 22 percent for spot television.

Gainers in print media included Sunday newspaper magazines, national newspapers and Spanish-language newspapers.

Of the media in which ad spending declined, the decreases ranged from 0.4 percent for outdoor ads to 13.2 percent for syndicated national television.

Decliners in print media included local newspapers, local magazines and business-to-business magazines.

The gains in the first quarter were fueled by important categories like automobiles, up 18.6 percent; telecommunications, up 10.6 percent; financial services, up 10.1 percent; and miscellaneous retail, up 8.9 percent.

In fact, 9 of the top 10 categories increased their ad spending in the quarter. The sole exception was direct response marketers, down 3.2 percent.

Of the 10 marketers that spent the most to advertise in the first quarter, seven spent more than the same period a year ago. The increases ranged from 1.3 percent for the No. 10 spender, General Electric, to 46.2 percent for the No. 5 spender, Pfizer.

Of the three marketers that spent less in the first quarter than they did in the same period a year ago, the declines were 9.1 percent for Verizon, No. 4; 11.8 percent for Johnson & Johnson, No. 7; and 11.8 percent for the Walt Disney Company, No. 9.

The rest of the top 10: Procter & Gamble, No. 1, up 17.7 percent; AT&T, No. 2, up 26.7 percent; General Motors, No. 3, up 28.5 percent; the News Corporation, No. 6, up 7.8 percent; and Time Warner, No. 8, up 14.7 percent.

By STUART ELLIOTT