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Shift of Ad Spending to Digital

Advertising spending has been shifting to the Internet at a rapid rate, with the IAB reporting that online advertising in Q3 increased by 18% over last year. For the first three quarters of 2012, the increase was 15% — far greater than the increase of 3.8% in spending for all measured media during the same time period.

 

Online Ad Spending

The IAB report reveals strong growth in a variety of formats, especially mobile (+92%), video (+18%), search (+17%) and banners (+12%). The notable exception is rich media, which posted a large decline of -34%. It has been hypothesized that the high production cost of rich media ads is causing a shift to other formats, especially video where a 30-second TV commercial can be easily repurposed into a 15-second online ad at a minimal cost. At the same time, concern is growing among advertisers and their agencies regarding the limited amount of video inventory available, with many reporting that video CPMs often exceed those of TV. However, it’s also clear that the more precise targeting that can be achieved with online ads along with a higher consumer engagement with video ads is also helping drive video ad prices above those of TV.