Online advertising increases its dominance as the biggest ad medium
Last year, spending on online advertisements surpassed spending on TV advertisements to become the biggest ad medium, and the gap between the two ad mediums is only increasing. In 2018, advertisers spent $40 billion more on online advertising than they did on TV advertising. Online advertising commands 40% of the global ad spending, and it’s split between social media advertising, video advertising, and online search advertising, which is the biggest type of online advertising. As we go online more often with increasing computer and smartphone usage, online advertising will likely account for the vast majority of advertising. Particularly the rise in mobile growth is facilitating most of the growth in online ad spending.
Such trends are going to change the way that advertisers approach decisions on where and how to market their products. Online advertising offers many benefits to advertisers, such as being more targeted to users because of targeting advertising initiatives and accessibility of online services. As a result, online advertising is held to a higher standard than other ads and often require higher premiums. The growth of social media advertising is becoming increasingly integral to the ad market because of network effects and links between people that make that content more likely to be seen by people who are more likely to buy that content. Likewise, online search advertising accounts for much of the revenue in the search industry and specifically enable companies to deliver products that the consumer is searching for, maximizing the likelihood that they will purchase it. Such network advantages from the online realm give online advertising a distinct edge over their print and television rivals; however, online advertising is still relatively new and will face many challenges, such as the ethics of using user information to target advertisements.
The concepts that we are reviewing in class, such as the structure of the web and the search industry all directly tie into these new developments in advertising. The ability for the user to access information that they are looking for, which is the purpose of the web, often results in them looking for products that are directly related. The ability of search engines like Google being able to connect search keywords to specific websites using page ranking and also specific advertisements further explain the growth of online search ads. Furthermore, our study of how search engines generate revenue through second price auctions and price-per-click schemes further explain the underlying reasons behind the seismic shift in the ad industry that we’re seeing.
https://www.vox.com/2018/3/26/17163852/online-internet-advertisers-outspend-tv-ads-advertisers-social-video-mobile-40-billion-2018