Internet Advertising - How The Field is Playing Out

If you look at the behaviour of family members in your own home and contrast what is happening with what happened in your home when you were a child, then the revolution in advertising will be obvious.  What are your children doing at home in the evenings?  Are they watching Tv?  Are they reading the newspaper?  No, they are on the internet.  

Newspaper circulation has been in decline for over two decades according to Nielsen.  Look at the data.  The decline is not showing any signs of abating.  In a recent report, USA Today reports that the decline is accelerating: "The Audit Bureau of Circulations said Monday that total average daily circulation declined 7.1% in the October-March period from the same six months in 2007-2008. The most recent drop was faster than the 4.6% fall in April-September 2008, and the 3.6% fall in October 2007-March 2008.   In Australia Fairfax Media has just posted a $380m net loss for the financial year 2008-09 on the back of a decline in advertising revenues.

So where is the advertising money going?  Where the readers are; on the internet.

In contrast, online advertising has increased worldwide.  After Sweden, Australia is showing some of the strongest growth globally. PriceWaterhouseCoopers (PWC) research predicts this trend to continue.  While traditional advertising media like newspapers, television and trade magazines are predicted to continue showing decline in advertising, online advertising spend is expected to grow 7%. So the advertising industry will be adapting to the changes in consumer behaviour. 

One of the benefits of advertising online is the ability to measure the return on advertising spend much more accurately that other media.  For example, with television and newspaper advertising, we pay for impressions.  Which impressions resulted in the leads or sales often remains a mystery.  However with most internet advertising, advertisers pay for clicks or qualified leads and these can be tracked. 

So where will online advertisers be targeting their spend?  According to PWC, over the next 5 years the main area of focus will be search marketing, attracting nearly 60% of advertising spend.  The biggest growth areas are predicted to be in the areas of social media advertising and mobile marketing.  This is to be expected given the relative immaturity of these platforms.

media spending online

It seems that the patterns are now clear.  Advertising spend will continue to flow to the places where consumers are spending more of their time; the internet.  Traditional media channels will consinue to decline.  Finally, most of the spend will be directed to search engines and there will be significant growth in advertising on emerging channels like mobile devices and social media. 

where the online advertising will go

Where will you be directing your spend?