Irish Digital Advertising Grew by 10% in 2017

The IAB / PWC Digital Ad Spend 2017 report was released this week, outlining the latest and most reliable cross-market view of the digital advertising market in Ireland. Total digital advertising in Ireland in 2017 was nearly half a billion euro (€491m) which reflected a growth of 10% on the previous year. You can read the headlines over on IAB Ireland, but I wanted to highlight what is significant here for those considering how to spend their digital advertising euros in 2018 and beyond.

Firstly a note as to the veracity of these particular numbers. IAB Ireland contracts with PWC each year to survey all the major players in the market to get a handle on the total internet advertising market. The difference between this report and most others or estimates from major stakeholders in the market is that Google and Facebook do divulge their total market numbers in confidence to PWC. So this is quite unique in that it gives us a very good handle of the total market - the big spend which typically goes through agencies PLUS the long tail of spend from SME's that goes directly to the big platforms.

Change is in the air right now in digital marketing. 2017 was the year when many many advertisers shifted their spend to programmatic advertising - buying audiences based on behavioural data across the web. In the midst of this Google, given the scale of its audiences and data capabilities, continued to outperform the rest of the market with Paid-For Search growing by 12%. Facebook, the other big data player, seems to have under-performed the market with Social Media ad spend only growing by 8%. However with total growth of 10%, we're talking about +/- 2%, so neither represents a radical shift in market spend. In fact, you could say that both are now very much part of the establishment. On the back of 30% growth in 2016, it seems even the big guys had a pretty dull 2017.

Innovation on the other hand seems to be coming via a couple of more discrete categories. Video On Demand (VOD) advertising grew by a whopping 46% in 2017 and now represents nearly 14% of the total digital advertising spend. Separately Native Formats excluding those on Social Media grew by 37% year on year. A third category - Classifieds - makes up the triad of advertising types that achieved more than 20% growth year on year. While the Classified sector is interesting in itself, it is less relevant to larger and medium sized businesses in terms of opportunity.

The shift toward a combination of video and native formats is notable for several reasons. We all understand that audiences engage much more with these formats than some of the more traditional formats. The consumption of video online is rising massively - the IAB reported back in October that over 74% of Irish adults (16+) watch VOD. Native formats appear seamlessly within the site on which they appear and which typically drive users to engaging content. Content marketing is expected (in some quarters) to achieve 16% compound annual growth globally between now and 2021. Putting relevant, entertaining and useful content, either in video, audio, image or text, in front of real people, is clearly a much more effective long term market strategy.

This also represents a reaction against the display advertising market dynamics that have emerged over the past couple of years. The murkiness that has developed means that many advertisers are focusing on a value proposition that they can understand and see. Furthermore, with the advent of the GDPR the reliance on third-party data stacks with unclear compliance to regulation is not looking like a reliable bet for the second half of 2018. The headline numbers in the IAB report feels like a shift from quantity back to quality.

This shift is good news for everyone. It means that audiences can expect less banner clutter as surely the bottom of the barrel creatives will gradually be replaced by more enticing formats. Higher quality requires higher investment. The higher investment means that creative agencies which focus on producing great content will benefit from a resurgence. While advertisers might need to invest more in telling their brand or product stories, they will surely get a higher return with more engagement from real humans. Get back to telling your story to the real people who might like to buy your product or service.

For the entire advertising industry this represents an opportunity to redress the recent race to the bottom and adopt business models that focus on great ads that audiences will love to discover. Wouldn't that be nice!

Pictured above at the launch of the IAB PwC Online Adspend study for 2017, at PwC, Dublin were (left to right) Back Row: Dominic McGinley, Oath, Eamonn Fallon, Distilled SCH, Front Row: Shane Nolan, Google, Dervla McCormack, PwC, Doug Farrell, DMG Media Ireland, Vanessa Fitzgerald, Facebook, me from INM with Suzanne McElligott, IAB Ireland