It’s Official. Internet Ad Revenue Surpasses Print

Keep your eye on digital video and rich media.

The tipping point has finally tipped. Marketers spent more on Web advertising in 2009 than they spent in magazines according to a new ZenithOptimedia report. Zenith researchers predict that online ad spending – now the third largest advertising medium – is rapidly closing ground on newspapers, too. Cynics will point out that online advertising revenue actually declined 3.4 percent in 2009, the first year-over-year falloff since 2002 and it would have been worse, had it not been for a record-setting $6.3 billion fourth quarter. But, the loss in ad spending across all media sectors was quite a bit worse -- 12.3 percent for the year and two percent for Q4.

For some perspective, consider that 2009 ad revenue at major magazines plunged to $19.5 billion (minus 17.5%), according to Publishers Information Bureau (PIB) data and PIB reports ad pages are down another 9.4 percent for the first quarter of 2010. Fortunately for publishers, a share of those missing ad dollars are “migrating” to publishers’ Web sites and other digital properties, but the media landscape has now changed to the point that the heady days of “buy or audience, let’s go have lunch” are barely visible in the rear-view mirror.

Keep your eye on digital video

The Interactive Advertising Bureau and PricewaterhouseCoopers recently reported that search ads posted a slight uptick from 2008, accounting for nearly half (47%) of all Internet ad spending. Display ad spending rose a similar amount. Revenues for online classifieds and e-mail advertising plummeted, but digital video ads climbed an astonishing 38 percent. Thanks mainly to search, display and video, eMarketer predicts that online ad spending will grow a healthy 5.5 percent this year, to $23.6 billion and will increase its share of the overall ad pie to 17.1 percent in 2012 from 12.6 percent today.

When it comes to online ads, it pays to get moving
Rich media ads outperform standard banner ads

If you use banner ads for marketing (or sell them to your clients), consider adding rich media to get more bang for your online buck. Here’s why. According to new findings from research firm eMarketer Web users were more than 2.6 times as likely to click on a rich media ad than they were on a static banner, and conversion rates were also up, by 198 percent, eMarketer said.

As we’ve mentioned numerous times in this blog, video is growing by leaps and bounds on the Web because consumers want to view a story rather than read it. It doesn’t matter whether you’re selling hammers, airline tickets or multi-million dollar enterprise resource planning software. You’ve got to show it to sell it.

Organic search results still generate 7 out of 8 clicks online

A recent Marketing Sherpa study shows conversions for organic (i.e. natural, unpaid) search results still outperform others. Why? Because researchers say prospects trust organic search results more than they trust paid, or guided-pay, search results. You can buy the space to reach target customers, but you can’t buy their trust. Like all entrée’s on the savvy marketer’s menu, paid search deserves a seat at the table. But if feel your diet is heavy on search just because it’s cheap, then you need to re-think your marketing strategy and overall value proposition.

Conversion Rates
Organic search*************7.2%
Shopping engine********6.6%
Pay per click*******5.0%
OVERALL************6.1%
Source: MarketingSherpa.com 2010

B2B sales pros increasingly turn to LinkedIn

Companies are relying more and more on their corporate Websites and social networking to bring in customers, according to new research from eMarketer. Social networking, while still gaining adoption at many organizations, recently passed direct mail and Webinars in terms of generating qualified leads for business and professional organizations. As of late March, social networking was closing in on live events and trade shows for lead generation.

The most effective social network for prospecting, says eMarketer, was LinkedIn, by a wide margin. The business-oriented site was rated 3.1 out of a possible 5, compared with ratings of 2.0 for blogs, 1.9 for Facebook and 1.8 for Twitter.

Research firm, Outsell sees it a little differently. A recent Outsell poll found that B2B marketers in the U.S. considered Facebook the most effective social media site, at 51 percent, followed by LinkedIn (45%) and Twitter (35%). That poll focused on effectiveness in general, not necessarily lead generation.

LinkedIn’s effectiveness in this area has translated into significant increases in usage. Nearly half of respondents (47.8%) told eMarketer they were using the site more for prospecting and research than they were a year ago. Around one-fifth of those polled were also upping their prospecting efforts on blogs (21.8%), Facebook (20.8%) and Twitter (17.3%) and one in 12 (8.4%) on YouTube.

January 2010 data from HubSpot showed nearly half (45%) of North American B2B companies using LinkedIn for marketing had acquired a customer through the site. Company blogs were effective for 43% of respondents, while 38% and 33%, respectively, got customers from Twitter and Facebook.

Macro-economy: cautious optimism becoming more optimistic than cautious

We’re not commenting on the overheated stock market today. More on that next week. Meanwhile, government data released Friday showed a nice increase in big ticket manufacturing items. Sales of new homes surged 27 percent in March. Despite persistent long-term (26+ weeks) unemployment, households are replacing cars, upgrading home furnishings and stocking up on gadgets. Many economists estimate that consumer spending — which makes up some 70 percent of American economic activity — jumped by four percent during the first three months of 2010, which was about twice as fast as the experts anticipated.

Our view is that month and months of pent up consumer and business demand will finally be unleashed sometime after mid-year. Technology companies are reporting strong sales and earnings. Intel (www.intel.com), reported its highest first-quarter revenue in history. Google (www.google.com) added about 800 jobs this year, and Amazon (www.amazon.com) has added 1,800. Manufacturing is slowly adding jobs. Retail sales surged 9.1 percent in March according to Thomson Reuters, marking the seventh consecutive month of growth. And U.S. exports are running about 15 percent ahead of last year, according to the Commerce Department.

OK. The wet blankets who compile The University of Michigan Consumer Sentiment Index said their benchmark plunged to a preliminary level of 69.5 in April compared with 73.6 in March. But that’s better the record low of 55.3 back in November 2008. And the American “savings rate” (long considered an oxymoron) climbed during the recession but has recently fallen, according to an analysis of Federal Reserve data by Economy.com. We view that as a sign of confidence, not recklessness.

Victor Ghassemi, sales manager for a Los Angeles Porsche dealership may have summed it up best in a New York Times interview today. “People get tired of holding on to their money, or just sitting at home and not doing anything,” he said. “People love to shop. And you take that privilege away from somebody, it lasts about a year. Eventually, people want to come back. They want to buy new merchandise, a new product, to make them feel really good about themselves.”

Victor, let’s hope you’re right and the economy keeps it in gear.

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