Advertising - New challenges for Telcos, Media Groups & Internet Giants

Published by: IDATE

Published: Mar. 1, 2008

Table of Contents

Introduction: a highly coveted advertising market

1. Advertising market framework

1.1. Scope of the advertising market

1.2. Media advertising: definition and properties

1.3. Non-media advertising: definition and properties

1.4. Goals of advertising

1.5. Advertising market organisation

1.6. Change in media spending worldwide

1.6.1. Advertising spending, per medium

1.6.2. Ad spending by geographical zone

1.6.3. Comparison of the media advertising spending structure in the largest markets

1.7. Non-media still accounts for the lion’s share of advertiser spending

1.8. Are below the line techniques bridging the media divide?

1.8.1. New media: extending non-media to the web?

1.8.2. Internet: a powerful medium for below the line techniques

1.9. Cross-media strategies: advertiser choices

1.9.1. Choice of media

1.9.2. Are traditional media ad budgets being transferred to new media?

2. Segmentation, targeting, interaction: the internet’s assets

2.1. New forms of advertising made possible by the internet

2.1.1. Traditional online advertising formats

2.1.2. The new advertising formats

2.2. Greater performance than other media

2.2.1. Segmentation and targeting

2.2.2. Support for the development of interactive advertising

2.2.3. A sounding box for advertisers

2.3. New tools for measuring ad efficiency

2.3.1. Measuring performance

2.3.2. New billing systems

2.4. Limits of legal issues

2.4.1. Invasion of privacy

2.4.2. Video advertising and integrity of the work

3. Mobile: a goldmine for advertisers… once the issues are resolved

3.1. High market potential…

3.1.1. A mass market

3.1.2. Assets for attracting advertisers and operators

3.2. …that is still under-exploited

3.3. Required market conditions

3.3.1. Increased audience and consumption

3.3.2. Building the value chain

3.4. Mobile advertising platforms

3.4.1. Mobile messaging

3.4.2. Mobile internet

3.4.3. Mobile multimedia

3.4.4. An array of interactive advertising possibilities

4. Traditional media’s adaptation and reaction to changes in the advertising market

4.1. Advertising: essential tool for financing media

4.2. Traditional media’s assets

4.2.1. Capacity to address a mass market

4.2.2. Primetime still king

4.2.3. Power of the media brand

4.3. Comparison of the efficiency of TV, radio, print media and internet advertising

4.4. Can traditional media reinvent advertising?

4.4.1. Towards a revival of TV advertising

4.4.2. Can digital cinema revive interest in in-theatre advertising?

4.4.3. Print media’s digital revolution

5. Ad-funded services

5.1. Principles and objectives

5.1.1. Definition of ad-funded

5.1.2. Limits of the paid model

5.1.3. The need for growth outlets

5.2. Ad-funded initiatives

5.3. Limits of the ad-funded model

5.3.1. Limits of the long tail

5.3.2. Limits of ad-generated ARPU

5.4. What services can be ad-funded?

6. Conclusions: how to share the wealth?

6.1. Challenges along the value chain

6.2. Forecasts

6.2.1. The United States

6.2.2. Western Europe

Tables and figures

Table 1: Strengths and weaknesses of media advertising

Table 2: Strengths and weaknesses of below the line advertising

Table 3: Theoretical modelling of the objectives of advertising campaigns

Table 4: Global advertising spending, per medium

Table 5: Forecast change in global advertising spending, per medium

Table 6: The main forms online media and non-media advertising

Table 7: Comparison of online and offline forms of advertising

Table 8: Comparison of the strengths and weaknesses of the different media for advertisers

Table 9: Average weekly time spent online in Europe, in 2005 and 2006

Table 10: USA: most popular tools with regular web users

Table 11: Mobile advertising’s share of the global advertising market

Table 12: Ad regulation on the free mobile TV service in South Korea (T-DMB)

Table 13: Leading providers of mobile marketing and advertising solutions

Table 14: Comparison of the impact of advertising in France in 2006, by medium

Table 15: Paid content and online advertising revenue in the US (2003, 2005)

Table 16: Press revenue in France (2003, 2006)

Table 17: TV revenue in Europe (2003, 2006)

Table 18: Ad-funded internet access initiatives

Table 19: Ad-funded initiatives in the calling market

Table 20: Ad-funded video initiatives

Table 21: Ad-funded video game initiatives

Table 22: Ad-funded music initiatives

Table 23: Various ad-funded initiatives

Table 24: Forecast change in the advertising market in the United States

Table 25: Forecast change in the advertising market in the largest Western European countries

Figure 1: Main players in the advertising market

Figure 2: Change in the breakdown of advertising spending worldwide, by medium

Figure 3: Change in the breakdown of advertising spending worldwide, by geographical zone

Figure 4: Comparison of marketing mixes in the biggest markets in 2007

Figure 5: Change in the structure of marketing investments in France and in the US

Figure 6: Change in marketing investments in France

Figure 7: Number of unique monthly internet users by country

Figure 8: Growth of advertising spending worldwide, by medium, 2006- 2009

Figure 9: Forecast growth of market share for online ad formats in the US, 2001-2010

Figure 10: Growth of CPM in France by type of display, in 2006 and 2007

Figure 11: Cost per lead for non-media formats

Figure 12: Users’ brand expectations on search engines

Figure 13: Forecast growth of market share for online classified ads in the US, 2001-2010

Figure 14: Advertisements on Windows Live Messenger

Figure 15: Click-to-call on Google and eBay

Figure 16: Web couponing

Figure 17: Sponsorship: Intel on Digg and Nike on MySpace

Figure 18: Sponsored links triggered by tags

Figure 19: Example of an in-game ad

Figure 20: Product placement in an online video

Figure 21: The L’Oréal Paris beauty contest in Second Life

Figure 22: A new approach to consumers in customer relations management

Figure 23: Mobile penetration rates

Figure 24: Number of users/viewers/listeners in France in 2006

Figure 25: Average monthly mobile consumption per user in Europe, in minutes of use (MoU)

Figure 26: Mobile advertising, still a very minor market segment in 2007

Figure 27: Breakdown of mobile advertising investments worldwide in 2006

Figure 28: Annual growth rate of advertising spending worldwide

Figure 29: Percentage of the population equipped with a 3G handset in the EU-15

Figure 30: Breakdown of mobile handset sales worldwide

Figure 31: Types of content viewed on mobile internet

Figure 32: Mobile advertising value chain

Figure 33: Example of a walled garden mobile advertising revenue sharing model

Figure 34: Structure of the mobile advertising market in 2007 and forecasts for 2010

Figure 35: Examples of texting campaigns using Netsize direct marketing solutions

Figure 36: Amobee’s ad-funded SMS/MMS solution

Figure 37: Two of the display formats offered by ScreenTonic: interstitial and billboard

Figure 38: Sponsored links on a mobile search results page

Figure 39: Click-to-call in the search results on Windows Live Search for mobile

Figure 40: Growth of voice and data ARPU in Western Europe, 2002-2007

Figure 41: Advertising on a free WAP music site

Figure 42: Share of internet users polled who prefer to watch an ad in exchange for free access to their favourite
mobile content

Figure 43: South Korean TV viewers’ reaction to advertising

Figure 44: Examples of interactive mobile advertising

Figure 45: Radio and TV revenue structure in 2005

Figure 46: Traditional French media’s resource structure

Figure 47: Comparison of the change in the amount of time that Europeans spend consuming the main media

Figure 48: TV penetration rates

Figure 49: Average TV viewing around the world

Figure 50: Average TV viewing in Western Europe

Figure 51: Average time spent listening to the radio in 2006

Figure 52: Use of the internet for listening to live radio (% of adults)

Figure 53: Use of the internet for listening to or downloading audio content

Figure 54: Change in the average circulation of daily paid newspapers, per issue

Figure 55: Comparison of media consumption times in France in 2002, by timeslot

Figure 56: Audience breakdown by time of day

Figure 57: Breakdown of advertisers’ TV investments, by time slot

Figure 58: Comparison of the change in the top national commercial channels’ share of TV ad revenue

Figure 59: Comparison of strengths of advertising on the six main media in South Korea

Figure 60: Reasons why viewers watch TV commercials

Figure 61: Contribution of the five tiers of advertisers to media ad revenue

Figure 62: Example of interactive product placement in the series "Sex and the City"

Figure 63: Change in print media and outdoor advertising’s share of media ad revenue

Figure 64: 2D barcode vs. classic barcode

Figure 65: 2D barcode in a magazine advertisement

Figure 66: Revenue share for the top online ad vendors in the US

Figure 67: Revenue per user in 20072007

Figure 68: Change in French households’ ICT budget, per item

Figure 69: Media and non-media ad revenue in France in 2006

Figure 70: Comparison of advertiser media spending in the main markets

Figure 71: Breakdown of ad revenue in the United States by type of medium

Figure 72: Breakdown of ad revenue in the United States by medium

Figure 73: Breakdown of ad revenue in Western Europe by type of medium

Figure 74: Breakdown of ad revenue in Western Europe by medium

Abstract

The world of advertising has joined the digital revolution. Recent examples of the success of sponsored links, the development of click-to-call, video advertising and local ads on mobile, along with the swift rise in the sums being earmarked for online advertising are a clear indication that the announced changes are beginning to have an impact.

Recent experiments with music financed by advertising, telcos’ investments in ad-based financing, product placement initiatives and in-game ads are all examples of the evolving landscape that are bound to enact deep-seated changes for both traditional media, which have long been financed by advertising, and for new telecom and internet industry players which are now incorporating advertising as a new source of long-term financing.

Based on an in-depth examination of the latest changes at work in the field of advertising, IDATE delivers an analysis of the assets of new advertising platforms, namely Web 2.0 and mobile, and of traditional media’s capacity to adapt and react to the changes. This report provides a detailed look at the new forms of advertising and efficiency measurement tools. It also supplies market share growth forecasts for the different platforms up to 2012.

Key Questions

• What changes are expected in the advertising market ?
• What are the new services operating on an ad-funded model?
• What are the new ad formats adapted to new communication platforms?
• What are the respective assets of traditional and new media when seeking to attract advertisers?
• Is the internet a platform of choice for non-media endeavours?
• Can the advertising market finance everything?
• How will ad revenue be distributed across all of the available platforms?

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