Citing the fact that usage of the internet takes up about 20% of media consumption yet that only 7.5% of ad budgets are devoted to the online arena, The Yankee Group is estimating that the budget share for online advertising will reach 15% by the year 2011. Yankee is also saying that the amount spent online per person will equal to three-quarters of what it spent on television. In 2006, the ratio has online spend amounting to less than one-third than that of television.
Mark Walsh of MediaPost writes:
Helping drive the online shift will be improved ad targeting, an array of new ad platforms, and publishers’ increased focus on “yield management”–maximizing revenue without upgrading ad inventory.
I’d add an increased focus on local regional advertising and the continued push from mainstream, traditional media outlets to bring their properties online. Hulu is one example.
Ironically, this mark of 15% may not be met because of ad agencies. Many mid-size or local agencies still resist developing true interactive capabilities beyond building a website and outsourcing low level SEM campaigns. Another potential reason this mark won’t be met is the insistence on focusing on ‘reach’, a tactic that doesn’t always make sense.
Hopefully things will change for the better and my first prediction for 2008 begins to become true.
{ 4 comments… read them below or add one }
I’ve been watching and blogging about this topic for a while now too. I think 15% will be an easy mark. I still think they’re underestimating the speed with which this industry is going to grow. Nice post.
Tommy
Jonathan-
I’d appreciate it if you would expand a bit on why you think there will be growth in “local” advertising (not sure what that means).
- Dennis
Good question Dennis.
I just struck through “local” and substituted it with “regional”.
By regional I mean larger businesses, localized restaurant chains (or franchises of larger chains locally owned), etc.
Enterprises that have, say, a regional presence in a metropolitan area.
The other night I met the owner of the restaurant chain Chicken Out. There are a total of 18 locations, all within the DC-Balt-MD-NoVA area. I would suspect that this type of restaurant would look to bring some of their marketing efforts online.
Real estate companies that are looking to show off certain properties may partner with developers.
I don’t expect the mom and pops to do much. That local restaurant down the street. The local dentist or florist. Many of them see the Yellow pages as the extent of it along with fliers here and there. Also, many of them still won’t have websites (or at least marketable websites) by the year 2012.
Don’t know if that answers your question…
Thanks Jonathan. My wife does corporate advertising for a chain of community newspapers in the Washington DC area (Connection Newspapers) which is why I picked up on your comment.