"It's still early innings" is a common trope among digital ad industry observers. In this week's episode of AdExchanger Talks, BMO Capital Markets equity research analyst Dan Salmon gets a little more specific.
He says we're at the "top of the third."
Salmon sees several waves of technology-driven change on the horizon, including the Internet of Things, smart cities, TV-digital convergence and the migration of trade promotion dollars to digital platforms.
In light of that last trend in particular, Salmon believes many analysts have significantly undersized the Total Addressable Market (TAM) for marketing.
In its Digital Marketing Hub 4.0 report (download it), BMO estimates TAM for the marketing and advertising sector at about $1.3 trillion. Its formula includes direct marketing, technology fees and trade promotion. It pegs trade dollars alone at more than $200 billion, much of which is spent with retailers to secure shelf placement and in-store promotions. Some of that money will migrate to companies enabling digital commerce, especially Amazon.
"We spend a lot of time expanding horizons of what the total budgets are available to companies like Google, Facebook and anyone who's selling ads on the Internet," Salmon says. "It's evolving quickly… just not in these channels that the Madison Avenue traditional advertising community has lined up against."
Also in this episode: Why TAM continues to grow in spite of cost pressure from big CPGs, the Amazon freight train and what the future may hold for the digital duopoly.