Hope in the Advertising Market
With the Upfront ad sales period — a bastion of Madison Avenue — a month away, a number of green shoots are emerging from the advertising sector.
From online, to cell phones, to traditional TV ads, the long cold advertising winter seems to be over.
Today Apple announced iAd, a new mobile advertising platform, in Steve Jobs' presentation of Apple's new operating system. The purpose of iAd is to enable application developers to better monetize their apps. By offering ads with applications, that should help developers keep the price of apps low, or even offer them for free.
Of course there are already a number of mobile ad platforms, but Jobs wants Apple to do it better, and of course, get a piece of the advertising pie. The fact that Apple is moving into this space speaks to the potential growth of the mobile ad market. The blogosphere is buzzing about the fact that Steve Jobs said in a Q&A session that he wanted to buy AdMob, a mobile ad platform, which Google ended up buying. The fact that Apple didn't opt to partner with Google is further evidence that Apple and Google are increasingly in competition.
Internet ad spending picked up in the second half of 2009, rebounding from its worst year in eight years.
A new report from PricewaterhouseCoopers and the Interactive Advertising Bureau found that spending in the fourth quarter grew 2.6 percent from the year-earlier period to $6.3 billion. This may seem like no big deal, but it shows a crucial upturn after a weak year — overall spending for the year, including the fourth quarter, dropped 3.4% to $22.7 billion. This is the first yearly decline in online ad spending since 2002.
Internet ads are still just about a quarter of the overall market, which declined 12.3 percent last year to $125.3 billion. But as advertisers start to ramp up their ad spend again, they'll devote a bigger and bigger piece of the pie online. Internet ad spending is expected to grow at least five percent this year. Some particularly bullish folks are looking for double-digit growth in the online ad space.
And even good old TV ads are expected to come back.
Scatter ad pricing — the cost of ads bought close to when they air, rather than during the 'Upfront' ad sales period — is up as much as 30 percent in some cases. This bodes well for the Upfronts in May. Considering how high last-minute ad purchases have gotten, advertisers will be more willing to commit a bit more of their spending upfront.
Today Morgan Stanley analyst Ben Swinburne issued a report reiterating his "overweight" rating on CBS, saying that it's the bank's top advertising play. Swinburne believes that local advertising in particular is poised for a rebound, and that CBS is well positioned to take advantage of that. And his optimism isn't only about advertising — the network's ability to create a second revenue stream from retransmission fees creates real upside potential.
Twitter's is expected to announce its ad model shortly... We'll be covering the debut of Twitter's ad model and its 'Chirp' conference.
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