Advertisement as an Industry has gone through rapid changes in dimension in ways of doing business and digital technology has enabled this transformation.
Digital technology has reshaped the ways of doing business in every sector and that has been a very scalable approach removing clutter so that organizations reach their potential destination weather it is customers or profitability.
Advertising as an industry has evolved over time with the advent and usage of digital technology. Now there are more places to advertise in the digital era unlike earlier, now social media advertising tops the list with the advent of the internet. Customers are looking for innovative approaches in showcasing themselves and grab the attention of potential customer base.
Digital technology when applied in ads brought hope to a wide range of suppliers, sellers, encouraging unique creative content unlike earlier when many couldn’t afford the cost of advertisements that required showcasing their products or services. Currently the entire user behavior and media consumption has gone sea change, no one stream of advertising and marketing channels is enough.
The traditional channels of advertising are not the only ways now and consumers are exploring innovative ways of advertising and this has been enabled with the advent of digital technology.
Defining Digital advertisement
Digital advertisement is defined when one pays to promote their products and services on popular online channels, mobile apps, search engines, websites etc. Advertising that appears on any online channels, social media platforms and or any digital channels like Whatsapp, Facebook, OTT platforms, Mobile apps etc. Digital advertising is a part of digital marketing and has its own unique forms.
Advertising that can utilize almost any form of media to meet its needs. Media including print, television, radio, cinema, outdoor, mobile and digital have all been targeted by advertisers.
The advent of digital advertising can be traced back to 1994 by wired websites releasing bannered ads in its website, but the year when Google launched and brought a concept of minimal search engines. Google monetized and paved the way for pay per click advertising and search engine marketing started the revolution in the advertising world.
Digital advertisements come in varied forms and no one form is the best as each and every method is user friendly.
Buying advertising space or slot, and monitor advertising efforts comes under paid form and sponsors pay to create advertising space, messages and content including display and banners. Digital technology played a pivotal role in the entire transformation.
Digital advertising are based on ROI and subscribers can measure their return on investment if they are working or require changes on ads that circulate on different platforms. Digital ads are highly goal oriented in terms of promotion and demand exposure towards targeted audience.
Data driven Digital advertisement.
In this Data oriented era when every move is backed by data, Digital ads focus on whom they want to target and how the target audience interacts with them. Data forms the backbone of digital advertisement. Now advertisers can analyze groups of buyers based on their profile information and online behavior and create lookalike groups of the people most likely to buy.
Digital ads are mostly viewed and target on digital media, highly dependent on user-based activity over the internet. For e.g., someone is viewing online jewelry. Their data is captured by many other businesses who are in same business and the user gets notification and ads are displayed in their digital medium from other providers exposing user with many alternatives.
There are various types of digital advertising and these can range from display advertising, search ads, video ads, audio, graphics, mobile based ads and social media ads. Nowadays we can see content forming an essential part of digital ads and these are mainly by influencers, YouTube based and applications.
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Digital technology added multi-dimensional aspect to Digital Advertisement Spending
Brands have evolved much more with digital advertising and changed their strategy and spend on advertising. As per Statista, in 2022, the internet was considered the most important medium for advertisers, accounting for 62% of total media ad spend. Internet expenditures are projected to record a growth of 8.4% in 2023.
As PwC’s Global Entertainment & Media Outlook (Outlook) reported last year, advertising grew a stunning 22.6% in 2021, accounting for 32.2% of total E&M industry revenues. The forecast says digital advertising to grow at a 6.6% CAGR through 2026—faster than the E&M industry and the economy as a whole—on the way to becoming a US$1 trillion market in its own right.
The growth is fed largely by digital. Over the 5-year forecast period, global internet advertising revenue will expand at an impressive 9.1% CAGR to reach US$723.6 billion in 2026.
Digital advertising spending worldwide includes both desktop and laptop computers as well as mobile devices and the estimate is 522.5 billion U.S. dollars in 2021. By 2026 this figure will reach a total of 835.82 billion U.S. dollars by 2026.
Mobile internet advertising is a heavily invested sub-sector of the digital advertising industry. Mobile internet advertising spending is forecast to increase from 276 billion U.S. dollars in 2020 to nearly 495 billion U.S. dollars in 2024.
The World Bank in January projected that India’s economy, the fifth largest in the world, will grow 6.1% in 2023, fueled by consumer spending.
Digital advertising spending worldwide (2021- 2026)
Consumer behavior transforming the world of Digital advertisement.
With the massive advantage digital advertising offers and tracks user behavior and understand the ROI, it is giving push to connected television, ecommerce shopping, in-app and in-game ad experiences and advertising on e-commerce websites.
These areas are expanding dramatically, offering larger advertisers a fundamentally different value proposition. Value proposition gives ability where advertisers can more faithfully track the outcomes and return on investment from spending.
Any platforms that see attention of users are seeing massive revenue growth and that is possible with digital advertising and their effects.
TikTok projected its ad revenues for the year to more than double in 2022, from US$4 billion in 2021 to US$10 billion.
The arrival of streaming companies are witnessing headwinds to subscriber growth, they are also starting to focus on advertising as a potential growth area.
Netflix, for example, has launched an advertising business, centered on a cheaper, ad-supported tier that offers a lower monthly subscription price aimed at expanding the potential universe of subscribers says PWC research.
Retailers on the other hand are advertising in social media besides ecommerce platforms and witnessing growth in their real-world assets which was not possible till a few years back.
We can conclude that entire consumer behavior, shopping experiences, competitive behavior, and regulations surrounding privacy and tracking play an effective role in understanding the core benefits of digital advertising.
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