What does the future of display advertising look like?

This afternoon, we gave a keynote address at the Interactive Advertising Bureau’s MIXX Conference in New York, entitled “Display 2015: Smart and Sexy.”

As you know by now, we’re investing significantly to make display advertising better for users, advertisers and publishers. Display advertising really is at the heart of what we’re doing at Google these days. 99 percent of our top 1,000 clients are now running campaigns on the Google Display Network. And last year, they increased their spending on display advertising by over 75 percent.

Today, we explained why we think display advertising is about to go through the biggest and most important revolution in its history. We made seven predictions about where display advertising will be in 2015:

• 50 percent of ad campaigns will include video ads bought on a cost-per-view basis (that means that the user will choose whether to watch the ad or not, and the advertiser will only pay if the user watches). That’s up from very little today.
• Today, advertisers are starting to deliver ads that are tailored to particular audiences. Many are using real-time bidding technology, so that they can bid on the ad space that they think is most valuable. In 2015, 50 percent of these ads will be bought using this real-time technology.
• With smartphone growth skyrocketing, mobile is going be the number one screen through which users engage with advertisers’ digital brands.
• Today, the “click” is the most important way that advertisers measure their display ad campaigns, but it’s not always the best measure—especially if an ad campaign is designed to boost things like brand awareness or recall. With new measurement technologies emerging, in five years, there will be five metrics that advertisers commonly regard as more important than the click.
• Just like most news articles on the web today can be commented on, shared, discussed, subscribed to and recommended, in 2015, 75 percent of ads on the web will be “social” in nature—across dozens of formats, sites and social communities.
• Rich media formats work. They enable great creativity and interaction between users and advertisers, but today they only represent about 6 percent of total display ad impressions. That will increase to 50 percent, for brand-building ad campaigns.
• All the investments that are making display advertising smarter and sexier will help publishers increase their revenues. Display advertising is going to grow to a $50 billion industry in five years.

We also wanted to visualize the face of the display advertising revolution, so we demonstrated four exciting new technologies:

• We demonstrated some new video ad formats we’ve been testing on YouTube that we’re calling “TrueView.” These will roll out later this year. These ad formats give people the option to skip an ad if they don’t want to watch, or to choose from multiple ads the one they want to watch. Importantly, advertisers only pay if the user chooses to watch their ad.
• We showed some of the things that are becoming possible with our new Teracent technology. This technology can dynamically alter the creative elements of an ad in real-time to make it more relevant and effective, depending on factors like geographic location, language, the content of the website and the time of day.
• You might be familiar with Google Goggles, a way to search the web on mobile devices just by taking a picture. We gave a preview of some experimental uses of Google Goggles that could one day enable advertisers to deliver great display ads to users. Imagine pointing your phone’s camera at an ad for a car in a magazine, and having the car appear in 3D in your mobile device. Or pointing at a movie poster and having the movie trailer play in the device, right in your hand. No QR codes, no downloads!
• We even showed a fun example of what rich media can do—our speech was broadcast live in a number of expandable ad units across the web, and was updated with tweets in real time.

We think that display advertising has a pretty exciting future and we’ll continue our work to make it even better. Thanks to everyone who came along to watch in New York, or who tuned in online. If you didn’t get a chance to see it, our speech will be available here later today.

Posted by Neal Mohan, Vice President of Product Management and Barry Salzman, Managing Director of Media & Platforms - Americas