Friday, May 2, 2008

Are Interactive Promotions the Next Big Thing?

A recent report from Borrell Associates, a firm that specializes in local interactive advertising, predicts an interesting shift in the expenditure of online marketing dollars. They assert that display advertising will lose ground to other types of expenditures, especially to promotions. “We believe it will peak this year at $12.6 billion, and then begin a precipitous decline to less than half that amount over the next four years.” The growth will come in online promotions, including public relations activity.

Click-through rates (CTR) for display ads have been getting a bad rap lately (and yes, there’s also been controversy over CTR for paid search ads, but that’s another story). The eMarketer chart (newsletter, February 28, 2008) from the “heavy clickers” study earlier this year got a lot of attention. According to comScore the study found “no correlation between display ad clicks and brand metrics, and show no connection between measured attitude towards a brand and the number of times an ad for that brand was clicked." Ouch!

When Chris Autry asked in iMediaConnection, “Is Display Advertising Dead?” he pointed to low CTR and permission-based content including what he calls narrow networks for special applications and my favorite, widgets. He describes advertising as an application and recommends that, “Consumers will not be bombarded with relatively useless adverts but will instead interact and be able to use a range of applications to perform relevant tasks.”

It is also possible that the movement of traditional mass media advertising dollars onto the web has propped up online display advertising. Will these advertisers accept for long the miserable click-through rates that are the norm today?

What is the growth in online promotions going to represent? According to Borrell contests, coupons and promotional gift certificates are working well at the local level. We’ve seen a lot of evidence of the popularity of video contests in national media, from the SuperBowl to Heinz ketchup.

Are contests reaching the saturation point, though? Ok, I’ll admit I’m not an American Idol fan either, but it seems to me there is a lot of room for creative promotional strategies. If promotion is going to in large part replace display advertising, we need some creative ideas for interacting with our target audience, whether it’s local or national. Any good ideas?
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