The Economist published an article today on the growth of online advertising during the economic downturn. So far there have mixed reports in the media about the fate of advertising in the next 9 - 12 months. Specifically, online advertising has been projected to decline; however, in this article the author points out that online advertising won't decline as much as it will expand less than expected -- only 8.9% instead of 14.5% as originally projected.
Search marketing will remain unscathed -- as predicted, however, marketers can't really create online campaigns around that channel. Display banners will continue to decrease -- they haven't proved to be very effective. Rich Media will expand especially as the technology and metrics behind it continue to improve. But that's not the real story here. What's most intriguing is that online usership is not decreasing; it's actually increasing -- even more so on a global level.
Just a few weeks ago the CMO of Hewlett Packard spoke to my agency. Much like most marketers he praised interactive marketing and ecommerce as being central to all campaigns moving forward. However, one staggering statistic that he referenced was that out of the 6 billion people in this world, only 1 billion currently have access to the Internet. The implication being that the online marketing is poised to grow six-fold over the next decade or so. And, that growth will be fueled by markets in Latin America, Asia and the Middle East.
The article also points out an undeniable truth: that consumers are migrating to sites where advertising has proven ineffective, such as social networks and video sites. This is no coincidence and also no attempt by consumers to elude advertising. These sites are just harder to monetize without disrupting the user experience. YouTube and Facebook have been attempting to create sustainable advertising platforms, but have yet to crack the code. And the tactics that have been widely used by marketers have grown stale and predictable, such as user-generated content promotions or fan pages on social nets.
The real boon for publishers has been in content development and distribution. MySpace Music, iTunes and Hulu are examples of successful ventures that distribute premium, professionally produced content and attract high volumes of qualified consumers. So far these sites have broken even or made small margins on their inventory. What this means for marketers is that there is a huge opportunity for innovation. Branded Content/product integration is a tactic that worked well for BMW harkening back to BMW Films and the film Ronin featuring Robert Deniro. Likewise for Cisco Systems with 24 and Dell for The Office. Branded Content won't be the solution for online marketing, but it's something that can weave into the patterns of behavior for online consumers without disrupting their experience -- provided it is done tastefully.
At the end of the day the article was reaffirming in it's point that as online usage increases at least domestically the effectiveness of traditional advertising tactics is declining or remaining stagnant at best. Recessions tend to produce increased innovation...and if there is light at the end of the tunnel it's that innovation will be the save-all for advertisers in during the next 9 - 12 months. It's not easy to innovate, but at least online all campaigns are in perpetual beta and can be optimized on the fly.
It will be interesting to see what comes out of the next year and how marketers differentiate themselves online.
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