Sunday, February 26, 2012

Trends in Digital Advertising

Online advertising is quickly becoming the most popular form of advertisement. For example, Facebook is currently about to integrate “Premium Ads” into their system. These Premium Ads will include more “social context” which means that “the friends of the people who are fans of a particular product that advertises on Facebook – not just those who have hit the “Like button for that brand – will see an enlarged version of the product’s advertising”. With new focuses on ads in many social networks, we can see many trends that have emerged in the past decade.

First is paid search advertising. This is a type of contextual advertising where companies pay search engines to link their ad for certain keywords. Each time the company’s ad is clicked, the company pays a certain amount of money to the search engine.  In the world of paid search advertising, Google is the leader of the pack. Google’s share of the paid search market is almost 80%.

Another trend is organic searches. An organic search is a search that generates results that are not paid advertisements. While organic searches may seem to hinder paid search advertising revenue, it has been found that organic searches actually increase the rate that a paid ad is clicked on. NYU Stern professors have found that “on average, the impact of organic listings on paid advertising is 3.5 times stronger than vice-versa, possibly because of the tendency of consumers to trust organic listings more than paid ads”.

Social media advertising is an obvious trend. In the 2000s, we’ve seen many social networks, such as Myspace, Facebook, and Twitter, rise to power. Companies now see these social media websites as an excellent place to market their products. As popularity in social media rises, so does the popularity of advertising in social media. In the Facebook example, we see that Facebook has decided to focus more efforts into advertising. As their global user growth rate is slowing down, they need more viewers and to make each ad as valuable as possible. Facebook’s current ad revenue is $3.15 billion, and they are hoping to increase this to as much as $100 billion.  Another example of social media advertising is Twitter. Ads on Twitter are a little different from ads on other social media sites. The ads on Twitter are integrated into the system as “Promoted Tweets”. Advertisers buy the “Promoted Tweets” and whenever a Twitter user searches a specific keyword, that promoted tweet will be the top result. This advertising plan is expected to make $150 million in advertising revenue for Twitter this year.

These trends that we have observed in the last decade have changed the world of advertising. It is predicted that by 2020, there will be 5 billion Internet users, compared to 1.7 billion now. As more people have Internet access, advertisers will find new ways to cater to those individuals’ interests and set more trends in online advertising.



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