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THE MONEY SHOT

Analyst: Online Ad Golden Age May Be Upon Us
Steve Smith

While the amount of time spent with online media continues to be “out of whack” with the dollars advertisers spend here, the tide may finally be turning, said Morgan Stanley analyst Mary Meeker at a presentation this week during New York Internet Week. Meeker finds that 28% of media time spent is now with the Internet even as only 13% of ad budgets go online. Meanwhile, 28% of media spend goes to print, which only takes 12% of our media consumptions. Meeker says there is tremendous room for growth, of up to $50 billion a year in Internet spend. The CPMs for digital media are well below other platforms. But Meeker contends that Yahoo’s display revenue rose 20% in the first quarter of 2010 and along with it did the time users were spending with the customized Yahoo home page (+15%). Meeker. She takes from this signs that the fundamentals are there for creative executions to help drive digital ad revenue into a serious growth spurt.

As she argued in a milestone presentation last fall, Meeker believes strongly that mobile represents the next great computing platform, and now she argues that mobile advertising could take flight. She points to the case of Japan, where mobile display ad revenue per user rose from $5 in 2006 to $11 by 2009.

On another encouraging note, Meeker said that the Apple iPad has proven to be one of the most successful digital device launches ever. Apple’s tablet took only 28 days to surpass 1 million units sold, compared to 74 days for the original iPhone, 180 days for the netbook. The only major consumer devices to have sold this quickly were the Nintendo Wii game console (13 days to 1M units) and Nintendo DS (15 days). Both Nintendo products were less than half the price of most iPads, however.

Internet Trends 2010 by Morgan Stanley Research

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COMMENTS

All well and good but Ms. Meeker neglects to acknowledge that although the audience is there, the inclination to click is not. Average click rates online are under 1%. When will research address the issue of ad receptivity online? The numbers already exist in print and they're very strong.

Posted by gary on Monday, June 14, 2010 @ 02:14 PM

I would argue that there are two reasons why ad receptivity online is the way it is, Gary:

1) The numbers for print were just never as accurate as we thought they were.
2) The online model is often CPM on a rotating basis rather than sponsorship; which means, unlike in a magazine, if you want to flip back a few pages and see/act on the ad again, you can't. It's why I believe a sponsorship model makes more sense.

Posted by Angie McKaig on Friday, June 18, 2010 @ 09:32 AM

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