By Luca Ascani, President, GoAdv, a pan-European online media company.
Increasingly challenging market conditions are having a knock on effect in many sectors, with budgets being tightened and the threat of workforce reduction a harsh reality. Nowhere is the downturn more visible than in the advertising world.
National newspapers recently reported an average decline in advertising of 13.5% for May and June 2008 and marketers and tightening the purse strings in an attempt to ride out the economic crisis.
However, market conditions are not having the same catastrophic effect in all sectors. As advertisers seek to streamline spending, many are increasingly looking to the internet to bolster marketing plans. With lower costs and higher returns on investment, the online advertising sector continues to grow from strength to strength.
GoAdv, a European online media company, is experiencing this effect first hand, with revenues over the past three years doubling year on year, and Q1 results in 2008 – the 13th consecutive quarter of strong growth - showing this trend is set to continue throughout the year.
A recent survey by ZenithOptimedia confirms this trend, with overall Internet ad spending predicted to "grow 32.3% and break through the 10 percent share barrier this year” – which is in fact a year earlier than Zenith initially predicted just three months ago. By 2010 Zenith also predicted that online advertising will attract 13.6 percent of all advertising.
In fact, the report highlights how the internet will become the UK's single largest advertising medium next year, overtaking both TV and newspapers.
This is in sharp contrast to what is taking place in the broader spectrum of the advertising world. The Institute of Practitioners in Advertising’s (IPA) Bellwether Report, announced in July, highlighted that the advertising sector was facing its sharpest downturn since September 11.
The report was based on a survey of 250 large UK-based companies and revealed that 27 per cent of those questioned reported a decrease in total marketing budgets and only 15 per cent reported an increase during the second quarter of 2008.
The gloomy outlook for the sector as a whole, however, is not replicated in the online world and the contrast can been seen clearly when taking into consideration that total advertising spend at its lowest in over six years, with the IPA predicting even further cuts over the next few months. These figures do not accurately reflect marketing activity that is increasingly focused on the internet as a cost effective medium with rapid results.
The reasons for this shift in advertising spend are many. The costs involved in production of online ads are relatively low in comparison to traditional mediums, as are the overall costs of ad placement.
The real benefits in economic downturn however, are seen clearly as marketers increasingly struggle to justify budget spend. The ability to quickly and automatically quantify return on investment (ROI) allows marketers to plan and spend wisely. Highly targeted campaigns that communicate directly with an interested audience is also desirable and online advertising easily enables this.
Performance based online advertising is now mainstream, with eMarketer predicted pay-per-click advertising is to reach $15.5 billion this year.
The results speak for themselves. In a climate of economic downturn where advertisers are increasingly looking to cut budgets and justify spend, online advertising is experiencing a real boost and the trend looks set to continue.
GoAdv’s has felt this effect directly, with many clients actually increasing budgets in online spend. Traffic figures are also increasing across our network of online media properties, including Excite Europe and Better Deals.
Excite’s unique monthly users have jumped from 5 million to over 8.5 million in under 6 months. Since listing on the Alternext of Nyse-Euronext in Paris, GoAdv has increased its European presence, bolstered by the growing number of advertisers keen to maximize their investments online.
Both eMarketer and ZenithOptimedia’s recent findings highlight our sector growth accurately – 2008 and 2009 look set to be monumental with a real shift in advertising trends that are set to stay.
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