Steve Dempsey: Desktop dodo in worse nick than print advertising
Way back in the mists of time (2014, for those who are counting) the New York Times leaked an internal innovation report, which turned out to be one of the most thought-provoking documents for anyone involved in digital media.
One of its more interesting claims was that the value of the homepage was decreasing. The New York Times brains trust found that only a third of the Times' readers ever visit the homepage in 2014, and those that do are spending less time there.
This was important for two reasons. Firstly, it represented the further unbundling of the online news product. Digital news was seen to be moving far away from print, and if it has a home at all, its home is social media, and news aggregators. Secondly, the decline in the number of visitors reading homepages, hub pages and section pages means these pages were set to become less commercially valuable.
And things have been changing since 2014, with mobile penetration increasing and mobile and social audiences growing in size and value. Earlier this year, for example, ComScore's US Cross-Platform Future in Focus, outlined how mobile is now driving almost all online growth in users, while desktop is becoming a "secondary touch point" for much of the digital audience.
ComScore found that mobile now represents 65pc of all digital media time in the US. Mobile apps account for the majority of that time. Desktop, on the other hand, now accounts for 35pc of all digital media time, a decline of 12 percentage points since 2013.
But what does that mean in commercial terms?
Well, ZenithOptimedia's recent Advertising Expenditure Forecast can tell us. Overall, the report is upbeat. Global ad expenditure will top $589bn by 2018. But there's a downside for desktop.
Zenith is updating an earlier prediction that mobile advertising would overtake desktop next year. By 2018, it now expects mobile to account for 60pc of all internet advertising - up from the previous forecast of 58pc. And while mobile ad spend is on the up, desktop is due to go the other way: global desktop ad spend will fall to $88bn by 2018, down from a high of $99bn in 2014. Yes, that's when the report from our prescient friends in the New York Times was leaked.
So how does desktop's worrying performance compare to other media formats? Well, a drop of $10.7bn from 2015 to 2018 is more than newspapers ($9.6bn) and magazines ($4.4bn). Yes, you read that right: digital desktop advertising is set to shrink by more than newspapers or magazines.
Desktop's decline is a symptom of consumers' shift to mobile devices. Desktop computers are increasingly becoming work terminals - personally or in the workplace.
Advertisers, of course, are following consumers into mobile. They are spending more money via social channels: Zenith predicts social to grow from 32pc growth last year to 35pc this year. At the same time ineffective and irritating formats like the banner ad are in for a difficult time. Banner advertising is predicted to decline by 1.8pc next year, according to Zenith's report.
The challenge for advertisers and websites with a business model based on advertising, is to create mobile ad experiences that are relevant to users. This is far easier in the realm of search advertising where mobile can facilitate smarter, more relevant and more localised services. But it's more of a conundrum for old-school companies that still think of their properties as honey traps for broad masses of audiences, which can be served up to marketers.
But let's not dance on desktop's grave too soon. It still provides greater real estate for advertising, and therefore, in theory, more impact. It's also still a vital channel for non-advertising-based businesses. According to Wolfgang Digital's 2016 E-commerce KPI Benchmarks Study, desktop wipes the floor with mobile when it comes to actual conversions. Here's what Wolfgang's report says: "The trusty desktop might be losing traffic share but it punches way above its weight when it comes to conversion, owning 63pc of revenue and enjoying the highest average order value and highest conversion rate to boot."
So while dwindling desktop traffic may spell bad news for advertising pure-plays, it is still a powerful channel for more transactional online businesses.
Sunday Indo Business