Digital Ad Spend to Rise Fastest in US Media and Entertainment Industry

Digital advertising spending is expected to grow faster in media and entertainment than in other US industries covered by eMarketer. A key driver behind the projected increases is the heavy use of video and rich media ads, the two fastest-growing ad formats, by marketers of news media, movies, TV shows, games and music. These marketers are also big investors in mobile advertising, which makes sense given the migration of media and entertainment consumption toward tablets and smartphones, according to a new eMarketer report, “The US Media and Entertainment Industries 2014: Digital Ad Spending Forecast and Trends,” part of our new report series, “2014 Digital Ad Spending Benchmarks by Industry.”

Advertising objectives in media and entertainment campaigns are as complex as the industries themselves. Sometimes marketers are trying to drive specific outcomes—digital subscriptions, in the case of a news publisher, or bodies in seats, in the cases of theatrical film openings or concert tours. Other times media and entertainment firms use advertising to burnish their brands. Examples of these types of ads might include homepage takeovers and sponsorships.

Overall, US media leans toward the direct-response side, with roughly a 60-40 split between direct response and branding. Conversely, the breakdown in entertainment spending is almost the reverse, with 36.5% of the total going to direct-response advertising and 63.5% to branding.

This mix between these two advertising objectives puts the combined US media and entertainment industries at an approximately 50-50 split, which is in line with computing products, telecom, and health and pharma, all of which have direct-response objective spending percentages ranging from the low- to mid-50s.

However, there are big differences between these industries’ advertising objectives. Media companies lean toward lower-funnel objectives such as getting customers to subscribe to digital content. Accordingly, US media’s spending has a 60-40 mix of direct-response and branding objectives, which is closer to that of the automotive and financial services industries. This mix is explained by publishers’ and news sites’ use of “always-on” search and banner display ads to drive traffic to their digital properties.

On the other side of the spectrum, US entertainment ad spending shows a 36-64 mix between direct-response and branding objectives, which is similar to that for the consumer packaged goods industry. This is likely due to entertainment companies’ heavy use of video, social and branded/custom programming approaches, which tend to aim for upper-funnel objectives such as driving awareness of a big video game title prior to its release.

“Virtually every advertiser has a dual need to build their brand and also drive lower-funnel actions,” said Yahoo’s Mark Ellis, vice president of North American field sales. “Some super high-end branded advertisers will never sell anything online, and some direct marketers are only interested in driving acquisitions. So everybody is playing on both sides.”

Courtesy of eMarketer