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Ad Week 2012: Digital, Display Ads Take Off

The annual Advertising Weekconference is underway in New York and the big question this year is where are ad revenues growing and who's cashing in on that growth?

No surprise, ad revenue in Europe is growing slower than expected.

But the mood here is upbeat - there's plenty of good news: the European ad market is expected to start improving as early as next year, and the U.S. ad market is growing faster than it has in years - and faster than expected.

U.S. ad spending is on track to grow 4.3 percent this year, according to Zenith Optimedia, which just upped its forecast for U.S. ad spending to 4.3 percent, from its forecast of 3.6 percent earlier this year. Where's this strength coming from? Television, which continues to be the biggest advertising segment by far, over 40 percent of all ad spend. And of course digital is driving the growth.

Who's doing all this additional spending? Retailers like Target and Kohls are spending more, and the rise of smart phones is having yet another positive impact: Apple and its rivals, competing to sell new gadgets. And foreign auto makers are also spending, though the likes of General Motors have pulled back.

The CEO of Zenith Optimedia North America, Tim Jones, tells us that within digital, "the big winners are social, search, and online video." And online video is growing - expected to grow 29 percent in the U.S. this year, as more people have access to video on mobile devices. "The ability of advertisers to get sound and movement on the Internet is obviously attractive. Now we're seeing the movement of that TV environment onto PCs, tablets, and mobile phones."

Driving all that digital growth are display ads - growing over 20 percent a year for the next two years, according to Zenith. In contrast, search ads, will grow just a projected 14 percent next year. The strength of display means great opportunity for companies who have built their businesses on display ads - like Yahoo, AOL, and now also Facebook. And it represents a major shift away from Google's massive dominance of search - the area that's growing the fastest is a much more level playing field. That said, Google is also investing heavily in the display ad space, but other companies will also be ale to capitalize on the growth.

And of course social spending will continue to be huge - Zenith projects total social media spending will grow 37 percent this year. That will benefit Facebook, Twitter, and YouTube. A surprise factor benefiting social media is the presidential election - politicians are spending more than ever to connect with voters through social media.

And just like Mark Zuckerberg and Sheryl Sandberg have been stressing, mobile is the future. Jones says mobile will grow faster than any other medium - 49% this year and even more over the next two years. (Read More: Where Facebook Is Looking to Grow: COO Sheryl Sandberg)

Everyone at Ad Week is buzzing about these trends. Each of the panelists that has taken the stage at the New York Times Center has talked about a few inevitable trends - the rise of mobile, the integration of social strategy into everything advertisers do. The big question - how to best use social platforms to connect with consumers wherever they are - on the desktop or smart phones. A number of the speakers today have trotted out examples about their best practices for Facebook and Twitter. But one thing's for sure - social is still a new medium, and everyone's trying to figure out how to use these new tools.

-By CNBC's Julia Boorstin
@JBoorstin

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.