Digital Advertising: Cashing In On Efficiency

Wednesday, March 4, 2009
Posted by Rob Rodenhiser @ 7:20 am

Check the due date on articles about the economic downturn – no, strike that – let’s just call it a recession. It seems every article you read these days about the recession is lined with projections of how severe the economic hit will be, but the problem is these forecasts only hold water for about a week then dissipate into gas as the downward slide continues. Projections are simply educated guesses, and while they are all generally negative these days, they seem to lack scope. The numbers I tend to look at look at are the hard numbers – 160,000 jobs lost in Canada in the month of January, 600,000 in the US in the same month – these are hard numbers. The other numbers of interest are the indicators – the records of exchanged money – and one that is of interest to those in the SEO field is marketing expenditure. In fact, marketing measurements of any kind are great indicators for gauging the health of the economy, but are also good for noting emerging trends.

Case in point – in a week that saw advertising revenues shrink across the board in traditional media outlets like the Chicago Tribune and the Canadian Broadcasting Corporation, it is interesting to note an article that appeared on mediapost.com entitled, “Economy Accelerates Shift To Digital Advertising”. The article’s title implies, and rightfully so, that the shift away from traditional media advertising was already underway before the economy tanked as many marketing budgets heeded the demographic shift away from traditional media outlets to iMacs in coffee shops. But what is interesting in the acceleration toward digital advertising is the implied underlying reason – efficiency. Any form of traditional advertising is inherently inefficient because it does not, and cannot, truly know the audience. As a writer, I know the truth behind the adage “know your audience”, but until digital marketing came along, their were very few marketers who could actually say they knew their audience – sorry, test cases don’t count.

According to the mediapost.com article, here’s the cold hard numbers on marketing expenditures for the near future. I should warn you, these are just projections, but they are based on hard numbers – indicators of where money is going. According to the U.S. Local Media Annual Forecast (2008-2013) by BIA Advisory Services and division Kelsey Group, through 2013, companies will reduce their investments in local advertising in favour of more ad dollars going toward digital rather than traditional media. Further, the article projects that U.S. local advertising revenue will decline from $155.3 billion in 2008 to $144.4 billion in 2013, representing a negative 1.4% compound annual growth rate (CAGR). “Companies will continue to increase the amount spent on interactive ads, from online to mobile to digital out-of-home that relies on IP platforms to transmit targeted messages. The Kelsey Group estimates the amount spent on interactive ads will more than double from 9% in 2008 to 22.2% in 2013.”

More than double – when was the last time you heard those words applied to growth? I think we’re on to something here.

1 Comment »

  1. I run a small company and the recession makes me re-examine my advertising budget. I ran across claims that publicity may be much more cost effective than advertising, but found no formal studies on it. I always thought PR was too expensive for small businesses but in doing my research I posted my project on AllPublicists.com (it’s a free service), and got many low-cost offers from publicists. One firm for example, called Publicity Guaranteed (PublicityGuaranteed.com) doesn’t charge anything unless they deliver results. However, most companies still put much more reliance on advertising than on PR. Is it because pay-for-results-only publicity such a new option or am I missing something? Are there any studies on the subject?

    Comment by Max Smith — Monday, April 6, 2009 @ 10:24 am

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