I’m a big fan of eMarketer and have followed Geoff Ramsey’s company for the past 5 years since meeting him at a Interactive to the Max conference in 2003. At that conference Geoff noted a projection by Jupiter Research stating that online advertising would hit 14.8 billion dollars by 2008 in the US. At the time revenues were only 7 billion. As Geoff presented this forecast a theatre of some 200 digital marketing enthusiasts chuckled and began to chatter about the possibility. Doubling revenues in 4 years seemed a bit crazy by any standard. It’s 2008 and looking back we can now say that Jupiter was way off!In the past 4 years online advertising spends have tripled!
According to a recent eMarketer report, spends will reach over 25 billion in 2008 for the US market. To put this into context, the US market spends about 149 billion dollars a year on advertising according to TNS Media Intelligence. If you include all aspects of online advertising(Display, Search, broadcast video) as capture in the eMarketer figure, online ad spends will represent almost 16% of the total this year. Assuming network television spending stays flat as predicted, it is likely that online advertising will exceed television in 2008. If Geoff had of told us that story 5 years ago he probably would have had everyone laughing in the aisles.
Despite a struggling US economy, online advertising is well positioned to continue to grow over the next 5 years. According to Forrester Research, it will triple again by 2012 hitting 61 billion in the US. This growth will be driven by the boom in online video advertising as more people use tools like YouTube and Google Video to connect with their audiences.
In order to realize this growth and benefit from it, advertising agencies will have to change how they deliver. The Internet is a consumer-centric medium and although many may debate it, the user is in control. In order to connect online advertisers have to engage the viewer and deliver a relevant message at the appropriate moment. They will have to listen, learn and communicate with the consumer. In order to achieve this level of engagement advertising agencies will have to change how they go to market. Forrester suggests that the future agency model will be a “Connected Agency” where the delivery of the message will move from “Push” to “Pull”. Advertisers will no longer broadcast they will “intercasting”, engaging consumers in direct conversations through communities and listening closely to their opinions and perceptions.