Now More than Ever
There’s little question that this is the year for interactive promotions. Heck fire, this is the century for them. The only unknowns are where the money will come from, where it will be spent, and how quickly the Next Big Web Thing will loom out of the fog.
While many forecasters have cut their projections for online advertising, it’s still expected to be a growth year for Internet marketing generally.
In early September, analyst Imran Khan with JP Morgan lowered his previous estimate for U.S. display ads in 2008 to 14% growth rather than the expected 20%. In adjusting downward, Morgan joins investment bank Cowen, which dampened earlier U.S. predictions of 19% growth in 2008 to 16%.
Most experts see search growth beating the overall average handily this year and next. Cost-conscious marketers, the thinking goes, will be increasingly drawn to online ad products that charge by the click or otherwise link payment to performance. Morgan’s forecast says U.S. search spending this year will increase 27% over 2007 — down from its earlier 32% expectation, but still robust.
Web monitor Nielson Online found that financial services companies — from banks and mortgage lenders to credit providers — spent 27% less on “image ads” in the first half of this year than in the first six months of 2007, while retailers cut back 7% on their display, and telcos dropped off 5%.
On the other hand, brands in other categories posted hefty display spending increases, signaling that marketers in these verticals are deciding that online ads can benefit their brands. The same first half that saw lenders using display less saw automotive brands increasing online display spending by 45%, CPG brands by 32%, and entertainment companies by a whopping 47%.
“Companies are recognizing the Web’s potential to play a leading role in the broader branding campaigns,” says Jon Gibs, vice president for media analytics with Nielsen Online. “This is movement by large advertisers into online and signals what we believe to be good long-term growth for online advertising overall.”
Of course, much spending on online promotions falls outside the narrow confines of either display or search advertising. Widgets, for example, act like downloadable display ads, but they also usually offer features or content that drive their spread virally, particularly among audiences who use social networks. Forrester has predicted that the marketing spend in “emerging channels” such as widgets will grow from an expected $2.1 billion globally in 2008 to $10.6 billion by 2012.
Online video is another multipurpose marketing tool that resonates beyond advertising. Marketers can rely on ads placed before, within or after video content that users want to see.
“Marketers want video advertising for its far greater branding power than other online formats,” says David Hallerman, eMarketer senior analyst.
Used in banners or widgets, video can serve as a kind of premium in itself, leading users to click through and engage with a promotion. The campaign for the hit movie “Pineapple Express” used ads in YouTube and MySpace that played restricted-access content in high definition, along with offering games and ringtones.
Then, too, online video can be deployed as a component in promotions and contests relying on user-generated content. Earlier this year Jones Soda launched a site designed to give its Handycam-wielding customers the same public visibility it offers to the folks who shoot its label photos — with no prize in mind.
“Smart brands realize that if they can turn their customers into advocates, everything in the business changes,” says Steve Rosenbaum, chief executive officer of Magnify.net, which provides the video platform for www.MyJonesVideo.com. “Jones figured out that their customers were fundamentally creative, and they’re tapping into that excitement to create a sustainable online community.”
SNAPSHOT
Automotive, CPG brands put more dollars online 2008
More than half of U.S. online users visit social network sites
Video ad spending up 55.9% this year over 2007
