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Digital ads top TV

Digital ad revenue will beat TV ads this year for the first time, fueled by social and mobile platforms, online video, and Internet searches, the research firm Magna Global forecasts.

“We’re new at this,” said Mary Ellen O’Brien of Cooper Mechanical Inc., a Bucks County contractor that moved most of its marketing online this year.
“We’re new at this,” said Mary Ellen O’Brien of Cooper Mechanical Inc., a Bucks County contractor that moved most of its marketing online this year.Read moreBradley C Bower/ For the Inquirer

Digital ad revenue will beat TV ads this year for the first time, fueled by social and mobile platforms, online video, and Internet searches, the research firm Magna Global forecasts.

Many businesses are driving the trend, as they rapidly shift ad budgets to digital platforms.

By 2020, the U.S. digital ad market could top $100 billion a year while the TV ad market stagnates at its current $63 billion, says Magna Global, part of the giant advertising firm Interpublic Group.

Newspaper advertising, including an influx of digital revenue, is forecast to fall to $14.7 billion in 2020 from $18.3 billion in 2015.

The tectonic media-ad shift is occurring as Google, Facebook, and other Internet firms target consumers using personal information scrubbed from the Web.

Digital ads can be tracked to the mouse click. And fast-growing mobile ads reach consumers wherever they tap into cellular or WiFi networks.

"We're new at this," said Mary Ellen O'Brien, marketing director for Cooper Mechanical Inc., a 40-truck heating-and-cooling contractor in Ottsville, Bucks County, that moved most of its marketing online this year from print. "There's a lot of fear that if you don't get on the train, the train is going to leave . . . without you."

Broadcast TV and newspapers are still the best ways to reach older customers. And major metro news organizations with large staffs can do the kind of public service journalism that spurs change and engages audiences extensively.

Rick Edmonds, media business analyst for Poynter Institute, a nonprofit training and innovation group for journalists, said newspapers are losing ad share mostly "to giant platform companies like Facebook and Google" that are "way ahead in gathering data on people and tailoring ads."

Edmonds said he was "moderately hopeful," as publishers experiment with charging for access to stories, develop new content, and seek revenue outside of traditional news. "There are a lot of different things being tried," he said.

Vincent Letang, Magna Global's executive vice president of global forecasting, said "advertising dollars follow eyeballs and consumption."

As for digital overtaking TV, he said: "The question is why it took so long in the U.S." Digital already is larger than television in several European nations.

Letang says he expects brand marketers in the U.S. to retain TV ads over the next five years, but extend audience reach through digital.

Eric Karson, associate professor of marketing at Villanova University's business school, gave the example of a woman shopping for sandals on the online shoe retailer Zappos.

"Amazingly, those sandals walk around and follow her on the Internet for a week or two," Karson said. "That's Zappos paying to get those sandals in front of her."

University of Pennsylvania Health System, the region's largest health-care provider, has boosted its digital ad spending to 26 percent of the ad budget from 14 percent four years ago.

Facebook has been a powerful and relatively cheap marketing tool for its in vitro fertilization practice compared with Web display ads, said Sarah Sanders, Penn's associate chief marketing officer.

Penn targeted women within a 50-mile radius by age and interests based on Facebook likes. The system paid to have its posts show up in the news feeds of those women. The most successful ads highlighted families, Sanders said.

The result was a 74 percent drop in the amount Penn spent for individual customer leads, she said.

Penn has cultivated heart disease and bariatric surgery patients online for years. "We can really understand what people are looking for and nurture them over time to give them solutions," she said.

So far this fiscal year, 28.9 percent of consumers who engaged with Penn's online ads by filling out a form or calling for information have become patients, Sanders said. The highest conversion rate is for those seeking cosmetic surgery, at 43.5 percent.

Campbell Soup Co., which manages an iconic brand, plans to devote 40 percent of its ad spending this year to digital channels, up from 23 percent last year, as it seeks to attract more millennials and young families, said Yin Rani, a vice president of marketing.

"We're almost literally following their media usage," Rani said. "Digital time spent is now more than TV and print time spent overall, and it's even more acute the younger the audience becomes."

Campbell advertises mostly on Web sites where it is sure to find customers.

"Our partners like Allrecipies or Epicurious . . . bring a lot of the right kind of people to their properties," she said.

Cooper Mechanical, a landmark on Route 611 near Doylestown, hired O'Brien as its first marketing director after a salesman suggested that the firm look for leads online. For years, Cooper advertised repair and installation services in local newspapers, magazines and restaurant placemats.

O'Brien has mostly eliminated print ads except for the local paper and has been tweaking digital. She talks of pay-per-clicks, retargeting ads, Google search keywords, and delivered online impressions - 10,000 for Cooper Mechanical in March.

"It's all about how good your keywords are," O'Brien said. These are the words that consumers use when searching Google. O'Brien works closely with a search-engine optimization firm, 1SEO in Bristol Borough.

Cooper first used HVAC as a keyword. But O'Brien found that consumers don't think of needing HVAC, or heating, ventilation and air conditioning. They search for "heater," "heater repair" or "geothermal contractor" - a Cooper specialty.

Cooper retargets customers and potential ones with ads so they don't forget the firm as other contractors woo them. "Computers aren't going away and people will continue to Google," O'Brien said. "You Google everything."

bfernandez@phillynews.com

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