By Ben Wood, UK MD, TradeDoubler.
As uncertainty surrounding the global economic outlook gathers pace, many of us, including consumers and businesses, will be left feeling the pinch.
Marketing budgets are typically vulnerable in periods of recession or economic slowdown, and have typically been among the first to come under scrutiny as companies seek to make savings to combat weaker sales forecasts.
The outlook for online advertising, however, is more optimistic with forecasts predicting that this sector is set to buck the overall advertising trend.
IDC recently issued figures suggesting that global online advertising would grow by 15-20% a year to be worth $106.6 billion by 2011, adding weight to the argument that gloomy economic conditions could even help to grow the online advertising industry.
The ability of online advertising to generate results cost effectively is particularly compelling at a time when marketers are seeking to justify spend and prove return on investment through more effective marketing channels.
Similarly, as consumers seek out bargains online, rising internet consumption and ecommerce will encourage advertisers to increase their online spend in order to more effectively reach and engage with consumers.
We are starting to see budgets shift further towards online often at the expense of traditional channels, such as TV, that are harder to quantify and measure. In the UK, online advertising spend has been forecast to outstrip TV as early as this year (Enders Analysis, June 2008) with advancements in video advertising helping to drive online investment.
But while the future continues to look positive, the industry must not become complacent. Some of the biggest advertising cuts are likely to be within industries that have traditionally been some of the most prolific online spenders, such as financial services.
Whilst these cuts may not initially impact online spend, no one can predict the severity of the economic downturn and online advertising must continue to prove its worth if these optimistic growth forecasts are to be realised.
As businesses adapt their online strategies, digital marketing specialists must be quick to acknowledge and respond to advertisers’ changing needs.
The internet offers excellent opportunities to interact with consumers, as well as numerous online channels to achieve objectives ranging from brand awareness to direct response, but industry providers must continue to drive advancements within the technology that underpins the industry, in order to build on this momentum.
Advertisers will expect better targeting opportunities, new functionality and improved creative formats. Perhaps most importantly we will start to see businesses demand deeper evaluation of their customers’ online journey, taking a more holistic view of their digital marketing activity.
This will allow them to better understand how their customers behave online in the lead up to a sale and identify where value is created. Key to this will be technology which provides transparency across multiple online channels, outlining the first interaction through to the final conversion.
By tracking a customer’s online journey accurately and effectively, advertisers are given insight which allows them to better apportion resources, resulting in better online conversions and increased sales - significantly improving online return on investment.
It is here that the accountability of online is highlighted in contrast to above-the-line activity which cannot be as clearly linked to sales.
Despite the credit crunch, it is very encouraging to see some of the growth forecasts coming out of emerging online markets, particularly in the central and eastern European regions as well as across Asia.
As companies become increasingly global and seek economies of scale through one central buying point, digital providers who can offer a truly international offering are uniquely placed to differentiate themselves and deliver ROI to advertisers.
Local presence and in-depth understanding of local advertising landscapes is invaluable in the ability to run multiple advertising campaigns across multiple online disciplines and multiple markets.
There is still a long way to go before online advertising budgets are truly reflective of the amount of time consumers spend online and this disparity will to continue to narrow as online advertising evolves.
Its growth over the past decade has doubtlessly been impressive and online has certainly proved its worth for businesses to extract accountable value from their marketing activities.
Through better understanding of the digital marketing options available to them and how these can be integrated into a business, advertisers are able to make informed, strategic marketing decisions which deliver results, even in the midst of a tougher financial climate.
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