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The Awaiting Boom: What the Data Say about Online Advertising

Team Engage

Team Engage

Morgan Stanley’s Mary Meeker’s analysis about the state of online advertising and the untapped opportunities it presents is a must watch for anyone involved in political media. Of critical importance, the under-monetization of social media advertising.

“We believe the inventory on Facebook is one of the most under-monetized classes of advertising on the web.”

In Meeker’s presentation at the Web 2.0 Summit, she references a chart similar to this one that highlights the disparity of time spent online vs ad spending relative to other media:

Meeker’s focus is primarily commercial, but it’s clear that political advertising dollars are similarly out of sync. As Meeker discusses in her presentation, online ad spending is “ripe for innovation” because of two key factors: First, the amount of time spent online and second, the ability to customize and target advertising to specific demographics.

For the political space, I would add the advanced geo-targeting as a third and very important factor for growth in online advertising. The vast majority of most campaigns’ typical media budgets goes to television, and, because TV (for the most part) isn’t targeted lots of money is spent on convincing people who can’t vote for the candidate.

Additionally, data continue to show that TV is a struggling medium, especially for advertisers. Nielsen’s latest State of the Media report has some telling figures about TV watching behavior. The fact sheet points out that over the last year, time spent watching TV fell by 14 minutes on average and the number of Americans watching “timeshifted TV” grew by 18%

At Engage, we believe that the future of online political advertising is bright and similarly ripe for innovation. In the 2010 cycle, we saw a handful of campaigns explore, in a very limited sense, online ads, particularly Search Engine Marketing (SEM), display ads, Facebook ads, and video ad products like Mixpo.

Moving forward, the online advertising space will continue to mature with better targeting, more sophisticated metrics, and new technology. More importantly, however, are the growing trends of more Americans spending more time online, more timeshifted TV watching, and less overall time watching TV. If candidates want to reach their voters through advertising, they’re going to have to do it more online.

Watch Meeker’s analysis of online advertising:

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