THE PENDULUM SWINGS
by Kip Cassino, Borrell Associates VP Research
Online ad spending won’t grow forever. The rate of growth for “legacy” online ad formats (pop-ups, banners, etc.) has already slowed in many markets. In general, local ad spending lags non-directed spending online by about two years. So, look for pop-ups and banner spending to go negative in your market about two years from now.
Is this the end of online marketing growth? By no means. Paid search engine placement is still growing like topsy, and growth here looks to continue through the decade. Audio and video streaming – the new kids on the block – are just now entering a period of explosive annual increases. By 2012, they look to surpass current levels of online ad expenditures.
All of this is part of a larger, world-wide trend. Marketers demand measurability. Offline media resist. The old saying, “I know half of my ads don’t work, I just don’t know which half!” is no longer said with a smile. The inability of newspapers, magazines, radio, and TV to prove return on advertising investment has led to a swing toward promotional spending.
Promotions spending have historically surpassed ad expenditures by a healthy margin. In most markets, fifty cents or more of every marketing dollar is not spent on ad programs. Promotions hold many advantages. They are eminently measurable, and can be used tactically as well as strategically. They are great for increasing sales in a single, targeted market – and so have become the primary tools of brand or product managers.
Online, this trend has led to a number of “quasi-ad” formats, which are used like ads but are really promotional in nature. The confusion between online advertising and promotions is well illustrated by the results of a recent survey of B2B magazine readers. When asked what part of their ad budgets they intended to increase this year, 45 percent said “spending on our website.”
The trend will continue, both online and offline. Examine your online ad budget. Are your formats pure advertising? Chances are, if you can measure results, they’re not.