Wedbush Securities said the Digital Hollywood surveyed respondents are bullish on Facebook advertising growth next year (2012) with median response of up 35 percent while average was up 63 percent.
We surveyed attendees at the Digital Hollywood conference in Los Angeles last week, and present our survey results in this report. Our survey included scores of conference participants (substantially more than 20 but fewer than 100, with the number varying somewhat by question), among them advertising agency execs, consultants, media platform owners, and businesses that purchase advertising and marketing services for their own account (a number in the entertainment industry, given the focus of the conference). We see the results as offering what might be termed 'the wisdom of the crowd' on current trends in advertising, marketing and media, said James Dix, an analyst at Wedbush Securities.
Dix said online social networks like Facebook are seen taking spending primarily from Google Inc. search, and secondarily from display and print. Respondents generally saw online search as most threatened by spending on social networking sites like Facebook.
That said, respondents saw Facebook as competitive with a number of other marketing platforms, including online display, print and broadcast. Dix found it slightly surprising that respondents generally agreed that Facebook was valuable for building brand awareness and customer loyalty, which are not typically what he sees as the primary use for online search.
Dix said respondents generally thought Facebook was valuable for customer acquisition (typically viewed as a strength of online search), although slightly less so than for building brand awareness and customer loyalty.
Dix said the respondents expect at least 10 percent of the spending that now goes to TV to shift in the next five years to online social networks. Here in particular, he noted that the attendees at this conference generally skewed towards being more dependent on online revenue than traditional TV revenue.
However, Dix found somewhat surprising the high probability which respondents placed -- a median of 70 percent -- on the likelihood of at least a 10 percent budget shift in the next five years, with bullish implications for social media and cautionary implications for TV networks and stations (e.g., CBS Corp., News Corp., Time Warner and Viacom in the coverage), in his view.
Dix said marketing spending is shifting to display and social media platforms from print and search. Over the past three months, respondents have been increasing spending in particular on display, social media and events, while decreasing spending in particular on print, TV and online search. Furthermore, respondents expect there to be a noticeable shift of marketing budgets to online display and social networks from online search over the next year.
We note the wide disparity of views on Facebook’s likely advertising growth next year. The fact that the average was substantially different -- and higher -- than the median indicates the impact of bullish outliers (200 percent growth, anyone?). By contrast, the difference between the average and the median for the probability of the TV-to-social budget shift was quite small, said Dix.