Interactive marketing to exceed 1/4 of all ad spend by 2016 (and how we know)
by Josh Bernoff
You see headlines like the one on this post all the time. This headline reflects of a Forrester prediction from the report "US Interactive Marketing Forecast, 2011 to 2016" by Shar Van Boskirk. Before I get into some tidbits from the prediction, I'd like to address the question that thinking people always ask about these forecasts: where do they come from?
Forrester analysts like Shar immerse themselves in the market. They are in touch with the demand side -- people who buy these marketing services, many of whom are our clients. They are also in touch with the supply-side, people like Google, who give us insights into what people are buying (and sometimes, publish numbers that we can use in our calculations). We also talk to people like agencies that are buying, charging clients for services, and have a broader perspective.
It's a huge amount of work just doing the research, and then that all gets put into a complex model which is checked a dozen different ways. The model reflects not just straight-line or hockey-stick projections of elements of the market, but also changes we see coming, like social media advertising catching on or video getting cheaper to produce.
Our clients (the smart ones) use these projections in several ways. They represent well-researched, reasonable expectations of where the market is going -- written down so people can work with their management for budget and planning. Vendors use them to identify where heat is. Note that you don't have to agree with a forecast like this to use it -- it's useful even if you're more bullish or bearish than we are on a certain sector or the overall market, because it gives you a place to start the discussion.
So, what did this forecast predict? The major top-line results are in Shar's post on the report. But here's what I noticed.
- Interactive marketing spend for the year 2011 is heading for $34.5 billion, 19% of all advertising spending. Our projection shows this spending more than doubling to $76.6 billion, 35% 26% of all advertising, by 2016 (and more than marketers now spend on television). This is massive. Digital marketing is unquestionably heading for the center of the marketing mix.
- The highly measurable returns of digital marketing are driving these ever-increasing investments. It not only works, you can prove it works.
- While search is also growing, its share of the total will shrink. The big growth is coming from Display ads ($10.9 billion in 2011, $27.6 billion in 2016), Video ($2.0 billion in 2011, $5.4 billion in 2016) and especially mobile ($1.7 billion in 2011, skyrocketing to $8.2 billion in 2016). The online world is splintering, but the splinters are growing like mad. The digital marketing mix is going to get increasingly diverse.
- Social media spending -- on technology to manage it, agency fees, and integrated campaigns (and this doesn't even include ads on social networks) will already reach $1.6 billion this year. We are projecting it to grow above $2.1 billion next year, and to reach $5.0 billion in 2016. Social programs -- not just social ads -- are now a significant part of the digital economy. When spending passes a billion dollars, you can't call it experimental.
The report also makes some interesting predictions -- that daily deals a la Groupon will die in a flurry of competition in your inbox, for example, and that we'll see ad-supported devices that make their success based on audience targeting. It's a hell of a world we're entering. But given the current economy, interactive and social media marketers just need to be glad they're in a part of it that's got healthy growth.