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Get Ready for the Good News and a Lot More Work

  |  October 2, 2007   |  Comments

Online ad spending is set to grow 24 percent in 2008. Here are some tactical tips to be prepared.

Are you busy? If you're like most shops, including my own, I'm sure you are. Brace yourself. You're about to get busier. Whether you call it the coming "digital storm" (as Sapient's Gaston Legorburu calls it), the digital tidal wave, or even the Internet's second coming, one thing's for sure: marketers of all stripes have woken up to the Web's power and promise of the Web, and online budgets are growing. We now ask ourselves whether this bountiful harvest will last, especially those of us who witnessed the last bubble burst.

A theory I evangelize is that even if the economy goes south and overall ad spending decreases, online's share will continue to grow, hence online spending will continue its growth. Many disagree, referencing the previous bubble's demise, which was accompanied by a precipitous drop in online spending and job loss in the sector.

Yet if the economy settles or goes into a slump, there are the key differences between then and now.

Yesterday and Today

Last time, a large portion of online advertising was funded by unprofitable, VC-funded ventures that ran out of money. CPMs (define) in many cases were out of whack with their value, and the industry (client and agency side) didn't understand how to best deploy, measure, and optimize their campaigns. Large brands viewed online advertising as experimental, and they allotted tiny portions of their budgets to try it. Those and many other factors really caused the huge decline in spending.

Today you have both profitable online ventures and traditional companies competing for online real estate. Even more important, online isn't just an experimental part of the mix. It's recognized by companies large and small as the best way to reach targeted audiences in an intimate and highly measurable way. The industry has also evolved to the point where agencies can clearly report on the value and ROI (define) of online in ways other forms of media could never hope to do. Clients have also gotten much better about understanding and embracing their online metrics. Money is driving online growth at an unprecedented rate, and advertisers are demanding a much higher level of accountability from all other media.

Another important factor is we no longer break consumers into on- and offline groups. It's not like we put on our online consumer hat when we go online and take it off when we're in the real world; we're all consumers, 100 percent of the time. What changes is not consumers but the environment they're in when they're online and what kind of immediate actions and meaningful brand interactions we can encourage at that moment.

Validating a Rosy Outlook

This week two interesting bits of news hit the wire that really validated this rosy outlook for our industry.

First, Jack Myers published a report that says online advertising would grow 24 percent in 2008 and 28.5 percent in 2009. That puts online's market share of ad spending at 8.4 percent in 2008 and 10.4 percent in 2009.

The big losers from this growth? Traditional forms of advertising that aren't as easily measured as online.

Myers' predictions: Broadcast network TV will increase 2.0 percent in 2007 and 3.2 percent in 2008 but will adjust downward in 2009, losing 4.0 percent. Terrestrial radio is expected to decline 2.0 percent in 2007 and rebound with 2.5 percent growth in 2008 before declining 4.0 percent in 2009. The largest declines in ad spending will be suffered by newspapers, which will lose 4.6 percent in ad revenues in 2007, 2.4 percent in 2008, and 4.5 percent in 2009.

Second, and seemingly in response to the Meyers report, "The Financial Times" published a bullish article entitled "Online advertisers may gain from downturn" that validates the theory that online will grow even if the economy turns. According to the article, "Indeed, pressure on companies to cut costs if the economy softens could even hasten the switch in spending from traditional media to more targeted and measurable digital forms."

Bracing for the Onslaught

How do you deal with this coming wave of work? Here are the tactical points I'd encourage:

  • Align your technical solutions into a solid platform and standardize implementation procedures as much as possible. Ensure you have third-party security audits for ad-serving and tracking platforms ready to go. Security-conscious clients have asked us for them many times in the past, and I don't anticipate that requirement will fade.

  • Document your processes, procedures, and best practices into manuals. Institutionalize the great way you do things.

  • Create a robust training program from those manuals so you can continually cultivate new talent. Recruiting from a shrinking talent pool can get expensive.

  • Reward innovation and evolution in your team. Have team members document their ideas and newly formulated best practices from their metrics and results. Remember, change is the one constant in online marketing.
  • If you're fretting about having too much on your plate, keep in mind: a full in box is 100 times less stressful than an empty one!


    Harry Gold

    As founder and CEO of Overdrive, Harry Gold is the architect and conductor behind the company's ROI-driven programs. His primary mission is to create innovative marketing programs based on real-world success and to ensure the marketing and technology practices that drive those successes are continually institutionalized into the culture and methods of the agency. What excites him is the knowledge that Overdrive's collaborative environment has created a company of online media, SEM, and online behavioral experts who drive success for the clients and companies they serve. Overdrive serves a diverse base of B2B and B2C clients that demand a high level of accountability and ROI from their online programs and campaigns.

    Harry started his career in 1995 when he founded online marketing firm Interactive Promotions, serving such clients as Microsoft, "The Financial Times," the Hard Rock Cafe, and the City of Boston. Since then, he has been at the forefront of online branding and channel creation, developing successful Web and search engine-based marketing programs for various agencies and Fortune 500 companies.

    Harry is a frequent lecturer on SEM and online media for The New England Direct Marketing Association; Ad Club; the University of Massachusetts, Boston; Harvard University; and Boston University.

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