Tim Elkington, director of research and strategy, IAB
Tim Elkington, director of research and strategy, IAB
A view from Tim Elkington

Think BR: When is 0.03% a big number?

Why have consumer goods brands massively increased their digital display spend, asks Tim Elkington, director of research and strategy, IAB.

IAB/PwC Digital Adspend results for H1 2012 included an impressive range of figures - a total half year value of £2.6 billion, an increase of 43% for online video advertising, a growth rate of 132% for online mobile advertising and £591m spent on digital display advertising in a six month period - all against a backdrop of GDP decline.

In among all these numbers, there was a much smaller, but much more significant figure - 0.03%. This slither of a percentage represents the difference in market share of digital display spend between consumer goods and financial advertisers.

Financial advertisers accounted for 15.75% of digital display spend, but significantly consumer goods advertisers accounted for 15.78% - making them the largest digital display advertisers.

The rise of consumer goods advertisers has been meteoric. In the first half of 2009 consumer goods advertisers accounted for 9% of display spend and this has almost doubled to 15.78% (let’s call it 16%) by the first half of 2012.

But what’s behind this change, why have consumer goods brands so massively increased their digital display spend?

Advertising online used to be about direct response, in the form of click-throughs from banner ads. The more click-throughs you got the better - and campaigns were assessed by using the click-through rate.

This easy accountability made online straight forward to use for direct response advertisers - it was easy to tell if your activity had worked by using simple click-through metrics. But what about brands - like FMCG advertisers - with campaigns that weren’t interested in immediate response; brands that wanted to drive traditional brand metrics like favourability and purchase consideration?

For a long time even those campaigns without direct response objectives were assessed using click through metrics. Advertisers were happy using what had become a familiar, though inappropriate, metric.

Though as click-through rates declined over time, partly due to the proliferation of online advertising, some came to the conclusion that online advertising was no longer working.

However the smarter advertisers asked the obvious question - just because someone hasn’t clicked on my ad does that mean that it hasn’t worked, what about the positive branding effect of being exposed to the ad?

Over time it became clearer that actually online ads worked a lot like offline ads. Just like seeing a great TV, magazine or outdoor ad, exposure to an online ad could have a positive effect on brand metrics, even if no click-through occurred.

The most exciting thing was that these learnings coincided with an explosion of creative formats for online display advertising. Advertisers were no longer bound by the restricting dimensions of the banner and could employ real creativity engaging with much larger formats including the custom background half page, and billboard - as explored in the IAB’s Size Matters research.

Those consumer goods advertisers used to preparing creative for TV even found that - preferably with some tailoring - this creative could also be used around the growing area of video content online.

So the increase in the use of digital display advertising by consumer goods brands reflects the changing nature of display advertising online and on mobile.

What was previously a direct response channel is evolving to become a rich branding medium in which brands can ignore less relevant metrics, take advantage of the creative opportunities offered by new larger ad formats and enjoy the branding benefits that digital display has to offer.

Tim Elkington, director of research and strategy, IAB