Digital spend to double in 5 years

Saw this article on AdAge and felt like sharing.

According to Forrester, digital advertising spend in the US is set to double in the next 5 years.

Digital, which will be about 12% of overall advertising spend in 2009, is likely to grow to about 21% in five years. Along the way overall advertising budgets won’t grow much.

So basically, ad budgets will remain relatively flat but the digital spend as a dollar value will double.

Forrester are predicting that mobile will grow by 400%, social media over 400%, email marketing by around 80%, display by over 100% and search by the same amount.

Now, who knows whether these predictions will come true. Most predictions generally don’t pan out as planned as the industry is moving so quickly no one can really predict where it will be in a few years let alone 5.

But one thing we do know is digial channels are becoming more important and the intrigue around them seems to have grown in 09. Undoubtedly moving forward – warranted or not – digital will command more spend.

And with more spend will come more scrutiny and hopefully more advancement around measurement etc.

So my question is this – do we have the infrastructure in place across these digital channels to achieve these projections?

I’d argue probably not.

To grow at 100% over 5 years you generally need to have the structure in place to resource this?

Do we have digital marketers with experience? Do we have agency professionals with the experience and skills required? Are publishers resourced in the areas of sales and commercial development? Are there enough digital skilled people in a client capacity?

Do we have metrics that we can use to rationalise increased investment? Do we have standards and process around trafficking, measurement, commercial terms that can cater for this?

Do we have the quality of case studies, best practice, innovators etc that can ensure digital can reach the 100% growth over 5 years without under delivering?

Do we have the quality of content required that will attract the brand advertiser categories digital needs to really boom?

Do we have solid rationale around pricing?

Are we offering a service level as good if not better than TV, radio, outdoor etc? If not, what are we doing to change this?

My feeling is right now the culture is around revenue and extraction not setting up foundations for the future. This is across all areas and it makes sense as everyone needs to cover costs. But in the next 12 months this surely needs to shift and the approach needs to be around developing rock solid pillars that ensure we can handle the next 5 or so years.


One response to “Digital spend to double in 5 years

  1. Ben,

    Couldn’t agree more. I also saw this Forrester report and have actually engaged them to submit a proposal to carry out a similar report for the AU market.

    In the meantime, if we apply a CAGR of 17% to the AU interactive ad market – ambitious but not unrelaistic – and the total ad market grows by an estimated 4% CAGR, then the interactive ad industry will surpass $3.75b by 2014 and a 22% share.

    The next 12 – 24 months are vital to establishing and implementing the infrastructure to support this growth – as you point out – resources, education, trading infrastructure, regulatory affairs.

    For it’s part, the IAB is working through it’s Councils to support some of these aspects, specifically measurement which will advance significantly in the next 12 months, research – putting more tangible marketing materials into the hands of marketers and agencies, and standards and best practices.

    But there are some big issues around the processes for planning and buying a digital media campaign – the fragmentation of digital agencies away from so-called traditional agencies, the fragmentation within digital – the rise of social media experts and agencies, SEO, SEM, the number of buy points agencies have to deal with, the list goes on.

    The paradox is there are so many bodies and businesses working to try to make it easier, simpler, faster to plan and buy digital media when in fact it is actually becoming more complex for marketers.

    There will be, and need to be, some major shifts in technology, process, integration of digital with other media, business models, measurement and metrics, org structures, in the coming months and years.

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