Enter your email address:

Delivered by FeedBurner

About This Blog

Josh’s Tweet Stream

  • More tweets

« The meaning of Steve | Main | New building »

August 25, 2011

Interactive marketing to exceed 1/4 of all ad spend by 2016 (and how we know)

by Josh Bernoff

Shar-Van-Boskirk 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.

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c50bf53ef014e8af23d43970d

Listed below are links to weblogs that reference Interactive marketing to exceed 1/4 of all ad spend by 2016 (and how we know):

Comments

Elias

So Josh are you a true blonde? Nice pic on this post!

John Kottcamp, CMO

What I find most interesting in the forecast is its implications for the way agencies do business. Interactive doubling over the next 5 years is really big. A shift of almost $35bn from tradition to digital should be not just another wake up call, but a giant slap in the face for agencies. I'm amazed how often I still run into agency peers who still think of digital as just another set of media channels where they can publish their ads. They don't get that along with a shift from traditional media to interactive, there is also a fundamental shift in the relationship between consumer and brands. Those agencies who will prosper will need not only top developers, but also top strategists who understand the new realities of customer relationships, of being customer obsessed.

MicroSourcing

It would also be interesting to note how interactive marketing will affect offline elements, or how online and offline marketing will be better integrated.

Dallas interactive marketing agencies

Thanks for an interesting article. Certainly all these less costly routes into the traditional marketing presents more opportunities for small businesses.

Jackie Kmetz

Interesting forecast numbers. I can't wait to see how it will all pan out in 2016 and the fun ride it will be to get there. Agree with Dallas in that it may open the door to some great opportunities for small business. Mobile is going to be the one I keep my eye on the closest.

Connor Keating

Indeed interactive marketing is starting to take over day by day. It's like video games a decade ago. Back then the video gaming industry was profitable but not nearly as profitable as the movie industry and now if I remember my figures correctly, the revenues from the gaming industry are at least at the same level as the movie revenues. In my opinion the boom of interactive marketing is caused in part by the fact that people started taking more and more interest in reputation and most importantly the online reputation.

Connor Keating

That's 100% true. We all live in a world that's heading more and more as every day passes to a world in which cyber space will completely overtake 'real' space. And of course what's the first thing that you try to do in and with a new space? Sell it and sell in it. Some good knowledge about interactive marketing I have seen in the writings of Yuri Mintskovsky which I can personally recommend.

The comments to this entry are closed.