Advertising

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.
[Fade out the market survey infos]

Introduction: a highly coveted advertising market

1. Advertising market framework
1.1. Scope of the advertising market 15
1.2. Media advertising: definition and properties 15
1.3. Non-media advertising: definition and properties 16
1.4. Goals of advertising 18
1.5. Advertising market organisation 19
1.6. Change in media spending worldwide 19
1.6.1. Advertising spending, per medium 19
1.6.2. Ad spending by geographical zone 21
1.6.3. Comparison of the media advertising spending structure in the largest markets 22
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? 24
1.8.1. New media: extending non-media to the web? 24
1.8.2. Internet: a powerful medium for below the line techniques 25
1.9. Cross-media strategies: advertiser choices 26
1.9.1. Choice of media 26
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 34
2.1.1. Traditional online advertising formats 34
2.1.2. The new advertising formats 41
2.2. Greater performance than other media 45
2.2.1. Segmentation and targeting 46
2.2.2. Support for the development of interactive advertising 47
2.2.3. A sounding box for advertisers 50
2.3. New tools for measuring ad efficiency 52
2.3.1. Measuring performance 52
2.3.2. New billing systems 53
2.4. Limits of legal issues 53
2.4.1. Invasion of privacy 53
2.4.2. Video advertising and integrity of the work 54

3. Mobile: a goldmine for advertisers… once the issues are resolved
3.1. High market potential… 55
3.1.1. A mass market 55
3.1.2. Assets for attracting advertisers and operators 56
3.2. …that is still under-exploited 57
3.3. Required market conditions 59
3.3.1. Increased audience and consumption 59
3.3.2. Building the value chain 61
3.4. Mobile advertising platforms 64
3.4.1. Mobile messaging 64
3.4.2. Mobile internet 66
3.4.3. Mobile multimedia 69
3.4.4. An array of interactive advertising possibilities 73

4. Traditional media’s adaptation and reaction to changes in the advertising market
4.1. Advertising: essential tool for financing media 77
4.2. Traditional media’s assets 79
4.2.1. Capacity to address a mass market 80
4.2.2. Primetime still king 85
4.2.3. Power of the media brand 88
4.3. Comparison of the efficiency of TV, radio, print media and internet advertising 90
4.4. Can traditional media reinvent advertising? 93
4.4.1. Towards a revival of TV advertising 93
4.4.2. Can digital cinema revive interest in in-theatre advertising? 98
4.4.3. Print media’s digital revolution 100

5. Ad-funded services
5.1. Principles and objectives 103
5.1.1. Definition of ad-funded 103
5.1.2. Limits of the paid model 103
5.1.3. The need for growth outlets 104
5.2. Ad-funded initiatives 104
5.3. Limits of the ad-funded model 111
5.3.1. Limits of the long tail 112
5.3.2. Limits of ad-generated ARPU 113
5.4. What services can be ad-funded? 115

6. Conclusions: how to share the wealth?
6.1. Challenges along the value chain 117
6.2. Forecasts 123
6.2.1. The United States 124
6.2.2. Western Europe 125
[Fade out table of contents]

Table 1: Strengths and weaknesses of media advertising 16
Table 2: Strengths and weaknesses of below the line advertising 17
Table 3: Theoretical modelling of the objectives of advertising campaigns 18
Table 4: Global advertising spending, per medium 19
Table 5: Forecast change in global advertising spending, per medium 20
Table 6: The main forms online media and non-media advertising 24
Table 7: Comparison of online and offline forms of advertising 25
Table 8: Comparison of the strengths and weaknesses of the different media for advertisers 28
Table 9: Average weekly time spent online in Europe, in 2005 and 2006 33
Table 10: USA: most popular tools with regular web users 46
Table 11: Mobile advertising’s share of the global advertising market 59
Table 12: Ad regulation on the free mobile TV service in South Korea (T-DMB) 73
Table 13: Leading providers of mobile marketing and advertising solutions 75
Table 14: Comparison of the impact of advertising in France in 2006, by medium 93
Table 15: Paid content and online advertising revenue in the US (2003, 2005) 103
Table 16: Press revenue in France (2003, 2006) 103
Table 17: TV revenue in Europe (2003, 2006) 104
Table 18: Ad-funded internet access initiatives 105
Table 19: Ad-funded initiatives in the calling market 106
Table 20: Ad-funded video initiatives 107
Table 21: Ad-funded video game initiatives 109
Table 22: Ad-funded music initiatives 110
Table 23: Various ad-funded initiatives 111
Table 24: Forecast change in the advertising market in the United States 124
Table 25: Forecast change in the advertising market in the largest Western European countries 125

Figure 1: Main players in the advertising market 19
Figure 2: Change in the breakdown of advertising spending worldwide, by medium 21
Figure 3: Change in the breakdown of advertising spending worldwide, by geographical zone 21
Figure 4: Comparison of marketing mixes in the biggest markets in 2007 22
Figure 5: Change in the structure of marketing investments in France and in the US 23
Figure 6: Change in marketing investments in France 24
Figure 7: Number of unique monthly internet users by country 33
Figure 8: Growth of advertising spending worldwide, by medium, 2006- 2009 34
Figure 9: Forecast growth of market share for online ad formats in the US, 2001-2010 35
Figure 10: Growth of CPM in France by type of display, in 2006 and 2007 37
Figure 11: Cost per lead for non-media formats 38
Figure 12: Users’ brand expectations on search engines 39
Figure 13: Forecast growth of market share for online classified ads in the US, 2001-2010 41
Figure 14: Advertisements on Windows Live Messenger 42
Figure 15: Click-to-call on Google and eBay 43
Figure 16: Web couponing 43
Figure 17: Sponsorship: Intel on Digg and Nike on MySpace 44
Figure 18: Sponsored links triggered by tags 45
Figure 19: Example of an in-game ad 48
Figure 20: Product placement in an online video 48
Figure 21: The L’Oréal Paris beauty contest in Second Life 49
Figure 22: A new approach to consumers in customer relations management 51
Figure 23: Mobile penetration rates 55
Figure 24: Number of users/viewers/listeners in France in 2006 55
Figure 25: Average monthly mobile consumption per user in Europe, in minutes of use (MoU) 56
Figure 26: Mobile advertising, still a very minor market segment in 2007 57
Figure 27: Breakdown of mobile advertising investments worldwide in 2006 58
Figure 28: Annual growth rate of advertising spending worldwide 58
Figure 29: Percentage of the population equipped with a 3G handset in the EU-15 59
Figure 30: Breakdown of mobile handset sales worldwide 60
Figure 31: Types of content viewed on mobile internet 61
Figure 32: Mobile advertising value chain 62
Figure 33: Example of a walled garden mobile advertising revenue sharing model 63
Figure 34: Structure of the mobile advertising market in 2007 and forecasts for 2010 64
Figure 35: Examples of texting campaigns using Netsize direct marketing solutions 65
Figure 36: Amobee’s ad-funded SMS/MMS solution 66
Figure 37: Two of the display formats offered by ScreenTonic: interstitial and billboard 67
Figure 38: Sponsored links on a mobile search results page 68
Figure 39: Click-to-call in the search results on Windows Live Search for mobile 69
Figure 40: Growth of voice and data ARPU in Western Europe, 2002-2007 69
Figure 41: Advertising on a free WAP music site 70
Figure 42: Share of internet users polled who prefer to watch an ad in exchange for free access to their favourite mobile content 71
Figure 43: South Korean TV viewers’ reaction to advertising 72
Figure 44: Examples of interactive mobile advertising 74
Figure 45: Radio and TV revenue structure in 2005 77
Figure 46: Traditional French media’s resource structure 78
Figure 47: Comparison of the change in the amount of time that Europeans spend consuming the main media 79
Figure 48: TV penetration rates 81
Figure 49: Average TV viewing around the world 81
Figure 50: Average TV viewing in Western Europe 81
Figure 51: Average time spent listening to the radio in 2006 82
Figure 52: Use of the internet for listening to live radio (% of adults) 83
Figure 53: Use of the internet for listening to or downloading audio content 83
Figure 54: Change in the average circulation of daily paid newspapers, per issue 85
Figure 55: Comparison of media consumption times in France in 2002, by timeslot 85
Figure 56: Audience breakdown by time of day 86
Figure 57: Breakdown of advertisers’ TV investments, by time slot 87
Figure 58: Comparison of the change in the top national commercial channels’ share of TV ad revenue 88
Figure 59: Comparison of strengths of advertising on the six main media in South Korea 91
Figure 60: Reasons why viewers watch TV commercials 91
Figure 61: Contribution of the five tiers of advertisers to media ad revenue 92
Figure 62: Example of interactive product placement in the series "Sex and the City" 97
Figure 63: Change in print media and outdoor advertising’s share of media ad revenue 100
Figure 64: 2D barcode vs classic barcode 101
Figure 65: 2D barcode in a magazine advertisement 102
Figure 66: Revenue share for the top online ad vendors in the US 112
Figure 67: Revenue per user in 20072007 113
Figure 68: Change in French households’ ICT budget, per item 114
Figure 69: Media and non-media ad revenue in France in 2006 114
Figure 70: Comparison of advertiser media spending in the main markets 118
Figure 71: Breakdown of ad revenue in the United States by type of medium 124
Figure 72: Breakdown of ad revenue in the United States by medium 125
Figure 73: Breakdown of ad revenue in Western Europe by type of medium 126
Figure 74: Breakdown of ad revenue in Western Europe by medium 126
[Fade out list of tables / figures]