Thursday, November 15, 2007

Should Marketers Stop Talking About Advertising?

Several recent studies have documented the persistent movement of marketing attention and dollars away from traditional media to interactive and social media. Highlights include a report from Forrester Research predicting that spending on interactive marketing will be over $61 billion by 2012. As a yardstick, their estimate of interactive for 2007 is in the neighborhood of $20 billion while TNS Media Intelligence estimated total advertising spend at over $152 billion.

These estimates vary hugely, depending on what media are included and the forecasting approach. For instance, Jupiter Media forecasts about $35 billion in online spending by 2012. eMarketer is in the middle, forecasting roughly $42 billion by 2011.

Whichever set of absolute dollar figures you subscribe to, the actual flow of dollars from traditional media to interactive is well documented. It is generally agreed that interactive is growing by double digits while many traditional media are experiencing actual declines in advertising revenue. The TNS figures are representative.

What is most interesting about the Forrester chart is their prediction of continuing strong growth in search marketing and huge growth lumped into “emerging channels.” Since they explicitly include online display ads, email and video (which also is forecasted to experience explosive growth) it’s clear that the emerging channels are other social media from blogs to social networks to advergaming and beyond.

Two other recent reports give perspectives on how this will change the advertising industry. A report by Accenture, quoted here last month, asked marketers to identify their top three areas for increased online spending. The choices are fairly conservative. Even so, they will create changes in how marketers carry out their interactive spending. Amateur content owners are new to the survey; the only growth area from the previous year is professional content owners. The “emerging channels” are content hogs and other content providers aren’t positioned to meet the needs.

The report with the provocative title “The End of Advertising as We Know It” is from an organization not known for frenzied speculation. IMB surveyed 2400 consumers and 80 advertising executives from around the world. Then they sounded impending doom for traditional advertising agencies and broadcasters as well as for traditional direct marketing. Advertisers themselves (DIY?), consumers and interactive agencies will create the most economic value.
This isn’t news to the traditional advertising agencies who are scrambling madly, through acquisitions and partnerships, to bring interactive services under the same corporate umbrella as their traditional services. This didn’t work well in the heyday of direct marketing back in the 1980s, it is proving problematical in the heyday of interactive.

There is a world of content creators out there—from the young man who created the iTouch commercial to residents of virtual worlds to the millions of people everywhere who post videos and photos. Savy marketers are learning to harness their own creativity and that of loyal customers in support of their brands. Let the learning continue unabated!
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