Online Spend: Up or Down?

Down, down, down? Or up, up, up? The prognosis for online advertising and marketing spend diverges 180 degrees, depending on how you read the numbers. And even how you interpret what “spending” is.

Research aggregator eMarketer just revised its forecast. Originally, the company predicted online ad spend would swell a modest but respectable 4.5 percent this year. But in the wake of dismal spending in the first half of the year — a 5 percent drop in spend — the forecast was revised to a 2.9 percent drop in overall ad spend this year, down to $22.8 billion.

EMarketer bases these numbers largely on the reports issued by the Interactive Advertising Bureau (IAB) with PricewaterhouseCoopers.

The only big winner this year might be Google, which pockets about a quarter of online media spend. While online ad spend in the U.K. just surpassed spending on broadcast television (according to the IAB), search is the driver on our fair shores. Advertisers drop about twice the money of search ads that they do on display.

What About the Rest of the Money?

What eMarketer, the IAB, PWC, and a host of other prognosticators fail to take into account is where the real shift in spending is going. It’s flowing into social media and content creation. In these channels, it’s much harder to guesstimate actual costs. Perhaps that’s why you almost never see numbers for online marketing side-by-side with those for online advertising.

A Different Kind of Spend

While online advertising slumped this year (and clicks on ads plummeted: 50 percent, according to comScore), online content is thriving. Forty-six million new Web sites were born in the period between January and April of this year according to Netcraft. That’s substantially more than the 29.9 million sites added to the Web last year.

In other words, content is thriving. The Web is growing. And while I’m unaware of any breakdowns of the type of new sites that are proliferating on the World Wide Web, rest assured that many of them are sites launched by businesses intent on increasing revenues and driving profits.

The problem is online advertising forecasters aren’t guesstimating the cost of this type of online marketing. It’s not actually free. Even launching the most rudimentary blog comes with a cost in personnel, planning, time, and resources. The same goes for the Facebook presence, the Twitter account, the YouTube videos, and marketing endeavors in any number of “free” social media channels.

But marketers are using channels, instead of, or in addition to traditional display advertising.

Free, But Not Free

Just as online marketing remains largely in silos and isolated from its more analog counterparts, it seems the same is happening with social media channels.

Just as the metrics of social media are stickier than those of “traditional” online advertising, so are breaking out the blurrier costs of social and content campaigns. It’s so much easier to stick to media buys.

That’s why reports on the “total marketing spend on social media” make little sense. PQ Media puts the number at $757 million in 2010, but they’re only counting blog, podcast, and RSS advertising. In other words, plain, old-fashioned media buys. That’s sort of like buying a display ad on Facebook and chalking it up to “social media advertising.” Sorry, but in my book, that’s a straight media buy, not an investment in social media marketing.

Forrester Research may have put it best when they said, “owned social media assets (like internal blogs, community sites) are really the only emerging media getting traction in today’s economic climate.” Taking content assets into account, the company predicts $716 million will be spent on digital social marketing this year, ballooning to $3.1 billion in 2014. “With dollars moving out of traditional media toward less expensive and more efficient interactive tools, marketers will actually need less money to accomplish their current advertising goals,” says the report.

Small wonder display advertising numbers are actually down when you put it that way, online and off.

Measuring social media and content spending versus traditional advertising isn’t going to be any easier than measuring the channels’ effectiveness, but common sense dictates it’s there, and it’s more cost-effective than traditional advertising channels that will suffer as a result. Even online.

If you want to follow where all this is going, as well as wrap some real metrics around the movement, keep your eye on auto manufacturers. Ford’s Fiesta campaign, according to J.D. Power, has generated 11 million social networking impressions, 5 million engagements on social networks (sharing and receiving), 11,000 posted videos, 15,000 tweets (not including re-tweets), and 13,000 photos.

The cost breakdown? Harder to say. But it’s reported that Ford is spending 25 percent of its marketing budget on digital and social media.

At least that’s a more honest accounting of where the dollars are flowing.