The IAB and PWC have released their Online Advertising Expenditure Report for the 12 months ending 31/12/07 and the results are interesting. If you compare Q4 2007 with Q4 2006, we're seeing growth of 19.5%
Usually these reports are greeted by all involved with requisite high fivery and back slapping ... but I would hazard a guess that when the last lot of data arrived the champagne would have stayed on ice.
Overall the industry is still experiencing solid growth - it's up 34.5% year on year. Display accounts for 28%, Classifieds 26% and Search 46%.
However these stats need to be analysed further. A common mistake many make is assuming ALL areas of online media are experiencing this 34.5% growth ... they're not.
Search is driving the growth, up 56% YOY (ie 06 to 07). Display was only up 21% from 06 to 07 ... this would be a concern to many, especially when you consider the industry had 56% growth from 05-06.
It is easy to assume 21% growth was not anticipated by most players, especially when numerous publishers I came across were forecasting 50% growth in their display business. I would hate to be a sales director at the moment looking at actual versus forecast.
Display, when you compare only Q4 06 to 04 07 is up 14% - compared to 29% for search. This shows minimal growth in what is generally the biggest quarter of the year. 14% growth would be celebrated by most media, but for online it's well below what is expected.
Adding more woe to the larger publishers is the fact more display dollars are going to what they refer to as 'the tail' ... ie anyone who isn't in the big 5. Some estimate this is 50% or more of total display spend ... which differs from a few years ago where the big 5 accounted for 75%+ of all display revenues.
Don't get me wrong, digital is still growing at fantastic rates ... but I think these results are a welcome reality check for many involved. For online to grow it is simply not enough to sit back and enjoy a category wide surge in spend ... the real winners moving forward, who see their own revenues increase higher than the overall industry, will be the ones who innovate and push forward what the definition of 'digital' media is ... from integration to video to content, search, mobile, digital outdoor, performance, analytics and beyond. This is something the industry as a whole needs to do - from publishers to media agencies to creative agencies and really starts at how digital is positioned within these environments. Those who have integrated digital, who have the right staff and the right learnings and the right experience are in the box seat.
For search the news is probably rosier than their display friends - now many are learning of the branding benefits and Google are seeing some great results in terms of expanding their product offering and the immediate advertiser benefits. One would predict that search can maintain current market growth domestically for the next 2 years. The issue for Yahoo! and MSN is that Google dominates this area.
I'm interested to get anyone elses opinion on the new IAB data ..