I ran across this article that will help with internet advertising predictions.  Dedicated to bring you the best information available on trends and marketing fundamentals for small and medium sized business, I believe that every business owner and manager should read this, as it is giving you the future of your advertising.

This is our particular goal with all our customers.

Seven Predictions for 2010 from eMarketer’s CEO

DECEMBER 14, 2009

Geoff Ramsey—CEO, Co-Founder

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It’s that time of year again—the season for looking back, reflecting on what transpired over the course of the year, and simultaneously looking forward, to formulate thoughts, and perhaps some hope, for what the coming year will bring.

Like last year, I have seven predictions I’d like to share with our readers, many of which will get underway in 2010 but gather momentum and take on greater importance in subsequent years.

1. During 2010, as US ad budgets crack open just a little, look for an accelerated migration of ad dollars from traditional to digital media. According to Forrester Research, 59% of US marketers plan to increase their budgets for digital by pulling funds from traditional outlets. Other sources support this shift, including a recent survey among Association of National Advertisers members and a separate study from Duke University’s Fuqua School of Business.

Areas of Marketing Spending Growth in the Next 12 Months According to US Marketers, July 2009 (% change)

Next year, while broadcast television, radio, newspaper and magazine spending continue to downsize, though more slowly than in 2009, online ad spending will enjoy a nice bump-up: eMarketer currently forecasts 5.5% growth. And the increase won’t all come from search—banner ads will grow 3.3%, and online video will jump by 40%.

Other researchers and investment banks are even more bullish on digital ad spending next year, with many predicting growth rates exceeding 10% (e.g., JPMorgan, ZenithOptimedia, Forrester, Collins Stewart, Citi Investment Research, Credit Suisse and Oppenheimer). Only one researcher, out of the 23 eMarketer is currently tracking in this area, is forecasting negative growth. The Yankee Group believes online ad spending will take another hit in 2010, dropping 1.5%.

2. Even post-recession, aggregate media dollars will fail to return to former levels. Looked at another way, while total US media spending will decrease by 14.6% this year, the $192 billion spent in 2008 will represent the absolute peak of media spending—at least for the next decade. I don’t believe we will ever return to that historic level, for these four reasons:

  • The measurement and accountability mandate will intensify demand for lower-cost, more efficient media.
  • Media fragmentation will force marketers to target their messages to ever smaller niche audiences.
  • Digital technologies are creating new opportunities for firms to self-market, such as a company’s own Website, online videos, e-mail marketing to existing customers and so forth. These channels end up bypassing paid media such as yellow pages and direct mail.
  • There will be a continued emphasis on “earned media,” such as on social networks and other consumer-generated community platforms. This will also siphon dollars away from paid media.

For decades, the entire multibillion-dollar media industry has been puffed up beyond its true value because of waste. Marketers paid huge sums to maximize reach, while knowing that thousands or millions of the people seeing their campaigns would never buy their products. Gradually, though, as the financial and housing markets are doing, media will shrink to match the true value it is delivering to marketers. That “true value” is being unearthed by better measurement systems, such as more efficient targeting.

For decades, the entire multibillion-dollar media industry has been puffed up beyond its true value because of waste.

3. While media dollars have imploded, media consumption will continue to explode. Due to increasingly empowered consumers and further advances in technology, look for media to become more:

  • Distributed—the same content will pop up in multiple locations, formats and channels.
  • Personalized—media will be tailored to reflect what consumers have watched, read, experienced and shared.
  • Contextualized—when and where consumers get their information will dictate its content and format, and that, in turn, will shape how they interact with and share it.

Each of these trends will lead to more precise targeting, which will also reinforce trend No. 2, the stagnation of media spending.

4. Advertising will support less and less of the load for content and entertainment. Fueled by the low cost of digital distribution, combined with vast amounts of consumer-generated content in the form of blogs, social networks, photo- and video-sharing sites, and rampant Twitter activity, media choices have exploded. There is no way advertising can pay all the freight for this media tonnage. In addition, marketers are clamoring for more direct contact with consumers, especially to engage with them on social networks, and this will divert ad money and attention away from third-party publishers.

Advertising will by no means go away, but it will play a smaller role as paid content and hybrid models emerge.

5. Advertising on social networks will never attract a large share of marketers’ ad dollars. eMarketer estimates social network advertising will grow only 7% next year to $1.3 billion, accounting for a mere 5.5% of total online ad dollars. And while ad spending on these sites will never represent a significant share of total online ad dollars, spending on non-advertising forms of social marketing will rise significantly next year and beyond.

Marketers are more interested in genuine engagement with consumers on social platforms, and less in opportunities to flood them with banner ads.

Social marketing works best when it’s earned, not paid for.

The spending emphasis is on internal staffing, and building structures and systems for two-way, real-time communications with consumers—and not so much on deploying ads. Social marketing works best when it’s earned, not paid for. It’s a matter of leveraging the inherent trust consumers have in each other.

Eventually, online social activities and connections will be baked into every form of digital content on the Web, from brand Websites and shopping sites to search engines, traditional media sites and entertainment portals.

6. Marketers will be increasingly willing to trade off reach for deeper engagement. This goes right along with the drive toward improved targeting and increasingly efficient media buys.

Rather than try to reach every conceivable person who fits a particular demographic, marketers will be looking for technologies and ad solutions that allow them to reach only the people who—by their past surfing behavior, search queries, online purchases, social connections, Twitter posts and other digital footprints—indicate that they are likely prospects.

The analogy here is to search. The search advertising market has been so successful precisely because it captures consumers’ intentions. When a user types “hotels in Bermuda” into a Google search box, you can be pretty sure they have an intention to reserve a hotel at that destination, and they are therefore likely to click and convert. Marketers wanting to capture intentions higher up the purchase funnel will want to identify people who demonstrate a likely desire to interact with the marketer’s brand, possibly leading to a purchase.

If a marketer is successful at the above—zeroing in on a narrow group of likely prospects—then there is a much better opportunity to engage with those consumers on a deeper, more meaningful basis.

In effect, less is more.

7. The classic interruption/disruption model of advertising, whereby marketers insert unwanted, usually irrelevant ads as a price the consumer must pay to view desired content, will erode, if not fade away. Consumers in the digital age simply have too much control over their media environments these days for marketers to be pushing unwanted banners, buttons or videos. This raises the bar for marketers and their agencies to develop new forms of messages that are not even perceived as ads, but rather as welcome content. The challenge will be twofold:

  1. To better identify likely prospects (as in prediction No. 6 above)
  2. To create communications that are so compelling, entertaining, informative or useful that the consumer is not only happy to receive them, but also motivated to share them with others.

Advertising creative, as well as the targeting technologies needed to identify likely prospects, will have to step up to this challenge.

Whether or not the recession ends, 2010 will bring about monumental change. Are you prepared to capitalize on it?

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