Trends for the online advertising market

Reality Sinks In at Online Advertising Confab - Advertising Age - Digital

I wanted to draw your attention to this very important, if depressing message coming out of (predominantly) US. Online advertising is not as immune to recession as previously thought. There are firms fighting for survival as budgets get squeezed and the whole display advertising business is coming under question.

Basically, there are two reasons to advertise: 

- the short term goal is to generate enough sales leads for the sales force to chase 

- the long term goal of building your brand

As their clients fight for survival, the ad agencies are under pressure to deliver short term leads. However, quality is bound to suffer in this short term focus. I expect more creative, if loose, definitions of what a lead is. And, that will be sad, because that is just postponing the problem by a quarter. This current market is unlikely to get better in a few months and dud leads will be shown up for what they are. 

IMHO, the online advertising model(before the advent of Web 2.0) has basically been largely about putting the alphabet 'e' before the corresponding traditional media version. So, we have banner ads (e-advertising),  e-direct mailers and e-newsletters and webinars (e-seminars). In many cases, we have been seduced by the efficiency of delivering content but we have not been as worried about the effectiveness of the message as it is delivered.

What does this mean for Indian marketers? I firmly believe that the only way for small businesses to make an entry today in the market is rely more on the internet to drive product adoption. Given that online media is still vastly under-represented in the marcom mix of most Indian companies, big or small, I think the market will still grow, albeit slowly. Here we are still on the efficiency curve. Also, there is an election coming and Obama has inspired all our political parties to explore the internet as a means to connect with the population. Given these factors, I still think the online advertising market in India will grow, even if the growth rate is nowhere as much as was forecast even a few months back.

How the recession is driving ad agencies to perform

While on the subject of the online advertising market, I looked up some recent published data from DNA India. Please read the article in full here.

The recession is giving rise to the following trends:

- Customers are moving to online ways of marketing/ advertising from the traditional media. The reduced marketing budgets are driving this.

- Customers are demanding to see clearly measurable and attributable results of their marketing spend.

- The model is becoming pay-for-performance; which simply means: "I don't care who and how many saw my advertisement. I care about what action they took after they saw the ad."

Did they click, visit a website, see a tailored offer or, actually purchase anything?

Advertising online will soon have to answer questions they have never had to answer. So, instead of spraying messages at random, they will have to collaborate with their clients in segmentation, targeting and messaging and positioning to maximise returns on the marketing spend in line with their objectives.