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Attitudes to Internet Advertising - US - July 2011

This report builds on the analysis presented in Mintel’s Attitudes to Internet and New Media Marketing—U.S., October 2010. It covers advertising through the following channels: banner, search, and online video ads. Advertising through mobile phones is discussed in the report but not included in market size figures. Mintel’s exploration of advertising through traditional mass media can be found in a sister Mintel report, Attitudes Toward Traditional Media Advertising and Promotional Marketing—U.S., September 2010.

Abbreviations

Here follows a list of abbreviations used in this report.

CPM – Cost Per Thousand Impressions

FSI - Free Standing Insert

GPS - Global Positioning System

GRP - Gross Rating Point

iOS - iPhone Operating System

IPO – Initial Public Offering

NCS – National Consumer Study (Experian Simmons)

SMB – Small-to-medium-sized businesses

Terms

The following terms are also used in the report:

Banner/display ads - A static or hyper-linked banner or logo placed on a web page with third-party content.

Click-through - The process of clicking through an online advertisement to the advertiser's destination.

CPM – Coser per thousand views - a metric used in the pricing of display ads, and distinguished from online ad models that are priced on a per-click basis (e.g., search ads).

Search ads - Paid ads that appear as the first few links on a search results page, or elsewhere on the page (e.g., column on the right-hand side of the page). Advertisers pay search engines to list and/or link their website to a specific search word or phrase.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Abbreviations and terms
                • Abbreviations
                • Executive Summary

                  • Ad spending shifting dramatically toward online sector
                    • Pricing and evolving online behavior drive change in market dynamics
                      • Search ads remain dominant as banner and video ads increase
                        • Google seeks growth through display ads, social networks, and strategic acquisitions
                          • Bing and Facebook deepen integration
                            • Advertising companies seek new metrics to prove their worth
                              • Younger consumers are largest audience of online advertising
                                • Facebook ads boast highest relevance
                                  • Protection of privacy is a significant obstacle
                                    • Google dominates search advertising but Bing is growing
                                      • Mobile advertising grows rapidly despite negative attitudes
                                        • Online video commercials must overcome consumer antipathy
                                        • Insights and Opportunities

                                          • Advertisers must address privacy concerns with clarity and consistency
                                            • Clear, easy-to-understand controls build trust
                                              • Consistency is key to building a reputation
                                                • Geographic targeting is the next revolution
                                                  • Figure 1: Interest in local websites, by year, May-Sep 2005, May-Oct 2006, Jul-Nov 2007, Apr-Dec 2008, Apr-Dec 2009 and Apr-Dec 2010
                                                • Building relationships with specific ad servers can build brand identity
                                                  • Emerging consumer segment may be moving away from TV
                                                  • Inspire Insights

                                                      • Inspire Trend—“Secret Secret”
                                                      • Competitive Context

                                                        • Spending on traditional media expected to decline in 2011
                                                          • Figure 2: U.S. advertising expenditures, by media type, 2009-11
                                                        • TV still a potent force
                                                          • Newspapers continue decline but more slowly
                                                            • Online newspapers try new models
                                                              • Figure 3: U.S. advertising expenditures, by media type, 2009-10
                                                            • Shift to online consumption most marked among youngest respondents
                                                              • Figure 4: U.S. media consumption changes, by age, April 2011
                                                            • Daily local deal sites test a new paradigm for online marketing
                                                              • Deal sites offer alternative for brand building
                                                                • Mobile is a rapidly expanding means of online access
                                                                  • Platforms for in-app advertising
                                                                  • Market Size and Forecast

                                                                    • Internet advertising rebounds strongly
                                                                      • Market size and forecast
                                                                        • Figure 5: U.S. internet advertising revenues, at current prices, 2006-16
                                                                        • Figure 6: U.S. internet advertising revenues, at inflation-adjusted prices, 2006-16
                                                                      • Fan-chart forecast
                                                                          • Figure 7: Fan chart forecast at 50-95% confidence levels, 2006-16
                                                                      • Market Drivers

                                                                        • Internet advertising benefits from general rebound in ad spend
                                                                          • Figure 8: U.S. total major media advertising spending, 2009-12
                                                                        • Americans spend more time online, especially on social networks
                                                                          • Figure 9: Top sectors, by share of time spent online, June 2010
                                                                        • Online supply increases, but diminishing effectiveness pushes prices down
                                                                          • Growing online video consumption drives internet ad growth
                                                                            • Growth aided by broadband and internet-connected TVs
                                                                              • Online video is superior to traditional video channels in delivering targeted ads
                                                                              • Segment Analysis

                                                                                • Video and banner ads increase share as search saturates
                                                                                  • Figure 10: U.S. new media advertising expenditures, by type of online ad, 2009 and 2010
                                                                                • Non-tech marketers increase share of spending
                                                                                  • Figure 11: U.S. sales of online advertising, by sector, 2010
                                                                              • Leading Companies

                                                                                • Overview
                                                                                    • Figure 12: U.S. internet advertising revenue share of leading companies, 2009 and 2010
                                                                                  • Google
                                                                                    • Display advertising increasingly important
                                                                                      • Social recommendations to increase relevance
                                                                                        • Strategic acquisitions to boost inventory and reach
                                                                                          • Expanding the client base
                                                                                            • YouTube (Google)
                                                                                              • Strategies to increase user engagement
                                                                                                • Google TV
                                                                                                  • Yahoo
                                                                                                    • Yahoo differentiates on ad size and layout
                                                                                                      • Video may also play a larger role
                                                                                                        • Microsoft
                                                                                                          • Bing-powered searches make steady gains
                                                                                                            • Bing adds Like button to leverage social networks
                                                                                                              • Loyalty rewards encourages Bing usage
                                                                                                                • Facebook
                                                                                                                • Innovations and Innovators

                                                                                                                  • Targeting integrates offline consumer information
                                                                                                                    • Location-based advertising on the rise within mobile channel
                                                                                                                      • Hybrid marketing strategies incorporate user-generated content to boost engagement
                                                                                                                        • New efforts focus on better standardized metrics of effectiveness
                                                                                                                          • Online advertisers create and refine new metrics to prove their worth
                                                                                                                            • Video sites pioneer features that refine targeting
                                                                                                                            • Penetration

                                                                                                                              • Online reach is substantial but still lags behind traditional media
                                                                                                                                  • Figure 13: Frequency of ad consumption, April 2011
                                                                                                                                • Age most important determinant in reach of online advertising
                                                                                                                                  • Figure 14: Frequency of ad consumption, by age, April 2011
                                                                                                                                • Youngest users most likely to engage, but also to leave
                                                                                                                                  • Figure 15: Frequency of abandonment of online videos, by age, April 2011
                                                                                                                                • Games a small but growing niche
                                                                                                                                  • Figure 16: Consumption of in-game advertising, by age, April 2011
                                                                                                                              • Relevance

                                                                                                                                • Facebook ads trump search in relevance
                                                                                                                                    • Figure 17: Relevance of online advertising, April 2011
                                                                                                                                  • Under-35s find online advertising more relevant
                                                                                                                                    • Figure 18: Relevance of online advertising, by age, April 2011
                                                                                                                                • Search Engine Usage

                                                                                                                                  • Google continues to dominate the search market
                                                                                                                                    • Figure 19: Search engine usage during product research, April 2011
                                                                                                                                  • Youngest respondents show stronger preference for Google
                                                                                                                                    • Figure 20: Search engine usage during product research, by age, April 2011
                                                                                                                                  • Google’s lead is greater among highest earners
                                                                                                                                    • Figure 21: Search engine usage during product research, by household income, April 2011
                                                                                                                                • Attitudes Toward Search Engines

                                                                                                                                  • Respondents loyal to search engines and do not recognize search ads
                                                                                                                                    • A quarter of respondents begin on search home pages
                                                                                                                                      • Figure 22: Attitudes toward search, April 2011
                                                                                                                                  • Online Video Ads

                                                                                                                                    • Older users particularly dislike being forced to watch ads
                                                                                                                                        • Figure 23: Reasons online video ads are not watched, by age, April 2011
                                                                                                                                    • Mobile Advertising

                                                                                                                                      • Younger respondents vastly more receptive to mobile advertising
                                                                                                                                          • Figure 24: Attitudes toward mobile advertising, by age, April 2011
                                                                                                                                      • Privacy

                                                                                                                                        • Majority of respondents uncomfortable with online information collection
                                                                                                                                            • Figure 25: Comfort with online and mobile tracking, April 2011
                                                                                                                                          • Older respondents more concerned about all types of online tracking
                                                                                                                                            • Figure 26: Comfort with online and mobile tracking, by age, April 2011
                                                                                                                                          • Women especially concerned about collection of personal information
                                                                                                                                            • Figure 27: Discomfort with online and mobile tracking, by gender, April 2011
                                                                                                                                          • Highest-earning respondents especially concerned about personal info
                                                                                                                                            • Figure 28: Discomfort with online and mobile tracking, by household income, July 2011
                                                                                                                                        • Impact of Race and Hispanic Origin

                                                                                                                                          • Asians and blacks more receptive to some types of online advertising
                                                                                                                                            • Figure 29: Frequency of ad consumption, by race and Hispanic origin, April 2011
                                                                                                                                          • Asians more sensitive to use of time
                                                                                                                                            • Figure 30: Reasons online video ads are not watched, by race and Hispanic origin, April 2011
                                                                                                                                          • Asians more likely to comparison shop using value-oriented search engines
                                                                                                                                            • Figure 31: Search engine usage, by race and Hispanic origin, April 2011
                                                                                                                                            • Figure 32: Attitudes toward search, by race and Hispanic origin, April 2011
                                                                                                                                          • Asians receptive to mobile advertising that is discount-oriented
                                                                                                                                            • Figure 33: Attitudes toward mobile advertising, by race and Hispanic origin, July 2011
                                                                                                                                        • Cluster Analysis

                                                                                                                                            • Cluster 1: Unengaged
                                                                                                                                              • Characteristics
                                                                                                                                                • Opportunity
                                                                                                                                                  • Cluster 2: Open Sharers
                                                                                                                                                    • Characteristics
                                                                                                                                                      • Opportunity
                                                                                                                                                        • Cluster 3: Smart Searchers
                                                                                                                                                          • Characteristics
                                                                                                                                                            • Opportunity
                                                                                                                                                              • Characteristic tables
                                                                                                                                                                • Figure 34: Internet advertising clusters, April 2011
                                                                                                                                                                • Figure 35: Frequency of ad consumption, by cluster, April 2011
                                                                                                                                                                • Figure 36: Attitudes toward search, by cluster, April 2011
                                                                                                                                                                • Figure 37: Comfort with online and mobile tracking, by cluster, April 2011
                                                                                                                                                              • Demographic tables
                                                                                                                                                                • Figure 38: Internet advertising clusters, by gender, April 2011
                                                                                                                                                                • Figure 39: Internet advertising clusters, by age, April 2011
                                                                                                                                                                • Figure 40: Internet advertising clusters, by household income, April 2011
                                                                                                                                                                • Figure 41: Internet advertising clusters, by race and Hispanic origin, April 2011
                                                                                                                                                              • Cluster methodology
                                                                                                                                                              • Custom Consumer Groups

                                                                                                                                                                • Different search engine users have different search behaviors
                                                                                                                                                                    • Figure 42: Search behavior, by preferred search engine, April 2011
                                                                                                                                                                  • Rural respondents more concerned about privacy
                                                                                                                                                                      • Figure 43: Privacy concern, by urban-rural status, April 2011
                                                                                                                                                                    • Larger households consume more advertising
                                                                                                                                                                        • Figure 44: Frequency of ad consumption, by household size, April 2011
                                                                                                                                                                      • Men with children find all kinds of advertising most relevant
                                                                                                                                                                          • Figure 45: Relevance of ads, by gender and presence of children, April 2011
                                                                                                                                                                      • Appendix—Other Useful Consumer Tables

                                                                                                                                                                        • By age
                                                                                                                                                                          • Figure 46: Method of internet search, by age, July 2011
                                                                                                                                                                      • Appendix—Trade Associations

                                                                                                                                                                        Companies Covered

                                                                                                                                                                        • Advertising Research Foundation
                                                                                                                                                                        • Amazon North America
                                                                                                                                                                        • American Advertising Federation
                                                                                                                                                                        • American Association of Advertising Agencies (AAAA)
                                                                                                                                                                        • American Marketing Association (AMA)
                                                                                                                                                                        • AOL
                                                                                                                                                                        • Apple, Inc
                                                                                                                                                                        • Association of Hispanic Advertising Agencies
                                                                                                                                                                        • Association of National Advertisers (ANA)
                                                                                                                                                                        • AT&T Inc.
                                                                                                                                                                        • Budget Rent A Car System Inc.
                                                                                                                                                                        • Digital Media Association (DiMA)
                                                                                                                                                                        • Facebook, Inc.
                                                                                                                                                                        • Financial Times Group
                                                                                                                                                                        • Foursquare
                                                                                                                                                                        • Gap (USA)
                                                                                                                                                                        • Google, Inc.
                                                                                                                                                                        • Groupon, Inc.
                                                                                                                                                                        • Hitwise Pty. Ltd.
                                                                                                                                                                        • Interactive Advertising Bureau (US)
                                                                                                                                                                        • Interactive Data Corporation
                                                                                                                                                                        • International Advertising Association (IAA)
                                                                                                                                                                        • LivingSocial
                                                                                                                                                                        • Major League Baseball
                                                                                                                                                                        • Marriott International, Inc.
                                                                                                                                                                        • Microsoft USA
                                                                                                                                                                        • Netflix, Inc.
                                                                                                                                                                        • News Corporation (The)
                                                                                                                                                                        • PriceGrabber.com, LLC
                                                                                                                                                                        • PricewaterhouseCoopers
                                                                                                                                                                        • Sony Corporation of America
                                                                                                                                                                        • Sprint Nextel Corporation
                                                                                                                                                                        • The New York Times Company
                                                                                                                                                                        • Twitter, Inc.
                                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                                        • U.S. Bureau of the Census
                                                                                                                                                                        • Universal Pictures
                                                                                                                                                                        • US Department of Commerce
                                                                                                                                                                        • Verizon Wireless (Cellco)
                                                                                                                                                                        • Yahoo! Inc
                                                                                                                                                                        • Yelp Inc.
                                                                                                                                                                        • YouTube, Inc.
                                                                                                                                                                        • Zynga

                                                                                                                                                                        Attitudes to Internet Advertising - US - July 2011

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