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Online Ad Spending Going Up; The Rest Not So Much

Online ad spending is not resilient. That would be the wrong description since it has not really needed to come back from anything yet. Even in this economy that continues to keep many mired in the muck, online spending is going up in ’09 and thru 2011. Sounds like a guarantee, right? Well, of course it’s not, it’s just the latest release of research that you get to play the online version of Ripley’s Believe It or Not.

Actually there is little doubt that the online advertising industry is still growing. The wildcard in any of these prognostications is the amount and for how long. MediaPost reports on research conducted by Publicis’ ZenithOptimedia Group.

The agency estimates that Internet ad spending will expand 10.1% in 2009, an increase of more than 1.5 percentage points over its last forecast in April.

“Its familiar virtues of transparency, accountability and flexibility have proved even more attractive in a recession than ever,” the Publicis shop writes in the new report, released early Monday morning.

The forecast predicts that online ad spending will account for 12.6% of all ad spend this year and increase to over 15% in 2011. Paid search is really pulling its weight with a predicted increase of 20% this year. Doing some simple math though tells us that the rest of the online industry is not nearly as robust since the segment as a whole is looking at a 10% increase this year.

Now the news for the rest of the advertising world

ZenithOptimedia attributed some of the surge in the U.S. search advertising marketplace to the launch of Microsoft’s new Bing search engine, which is creating “welcome competition to Google and should spur further innovation in search.”

The gain’s in the Internet’s share of global ad spending appears to be coming at the expense of every other major medium. ZenithOptimedia predicts spending in all other media will decline this year.

It’s not like there are new dollars coming into marketing during this recessionary period. It looks like it’s just the shifting of existing budgets into more efficient and effective methods like most online options. The ability to measure results is once again the focal point. If marketers are going to spend they better be able to report what happened for the company’s money. If they can’t then we’ll see the average life of a CMO drop below the current 22 month or so tenure.

The predicted effect on the other areas that are losing ground to online spend are:

  • TV down 7.1%
  • Cinema down 4.8%
  • Outdoor down 7.0%
  • Newspapers down 14.7%
  • Magazines 16.7%

Despite these declines these traditional marketing vehicles still account for about 90% of the overall ad spend. How long will it take for online to reach a 50% share of ad spend? Will that ever happen? Will traditional media go away completely or just look very different? Can it stay the same and still survive? Let’s hear your completely unscientific predictions of the future of advertising. It’ll be some good summer fun.


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