Have We Reached, And Gone Beyond, The Advertising Medium Tipping Point (At Least in the U.S.)?


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A new report from the Internet Advertising Bureau, prepared by PwC, showed that online ad revenue in the U.S. reached almost $43 billion for 2013, eclipsing television advertising (at about $40 billion) for the first time. The highest single category of digital advertising came from search, at over $18 billion, or 43% of total revenues, and it grew at an almost 10% rate over the prior year. Retailers were the largest category of advertising, spending 21% of total online ad dollars, followed by financial services, automotive, telecom, and leisure travel categories.

Embedded in the report was perhaps the more impressive statistic. Mobile advertising revenue for 2013 was over $7 billion, more than double the amount for 2012. This was the third successive year, according to IAB and PwC, that digital growth doubled its previous year’s level. Digital video also grew significantly, to nearly $3 billion.

There are plenty of tide-turning implications to draw out of these findings, the most important of which is the overtaking of television advertising by digital advertising. As quoted by IAB President and CEO Randall Rothenberg, “The news that interactive has outperformed broadcast television should come as no surprise. It speaks to the power that digital screens have in reaching and engaging audiences. In that same vein, the staggering growth of mobile is clearly a direct response to how smaller digital screens play an integral role in consumers’ lives throughout the day, as well as their critical importance to cross-screen experiences.”

Echoing Rothenberg’s point about mobile, David Silverman, a Partner in PwC U.S. said: “Our survey confirms that we are fully in transition to the post-desktop era. Triple digit advertising revenue growth from mobile devices contrasted the more tepid 8 percent growth from traditional computer screens. This is simply a reflection of the change in how and where consumers are viewing their information — on the go!”

Major transitional changes, indeed. Mobile is the most recent trend in a cycle which is a couple of decades old. By the early 1990’s, control of brand and supplier selection had begun to shift away from companies and moved to consumers, a result of several pivotal, converging factors:

1) Growing Internet penetration and mobile device usage, as communications enablers
2) Over-saturation of ‘push’ advertising and promotional messaging through traditional mass electronic and print media, and
3) Heightened public distrust in the honesty and authenticity of corporate actions in the marketplace.

These were significant, even seismic, changes in the way businesses had to think about reaching, and engaging with, current, potential, and former customers. Online advertising, and more recently mobile advertising, is now the “new rule”, and first choice, of push communication. It has, in reality, taken about twenty years for the advertising expenditure tipping point to move to digital and mobile from traditional electronic and print media; but, this is the reality of the future, and we’re unlikely to see any change in this trend.

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.


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