By: Laurie Sullivan – February 27, 2009 – MediaPost
The struggling economy may force companies to reduce investments in local advertising through 2013, but more ad dollars will go toward digital rather than traditional media, according to the U.S. Local Media Annual Forecast (2008-2013) by BIA Advisory Services and division Kelsey Group.
U.S. local advertising revenue will decline from $155.3 billion in 2008 to $144.4 billion in 2013, representing a negative 1.4% compound annual growth rate (CAGR).
Companies will continue to increase the amount spent on interactive ads, from online to mobile to digital out-of-home that relies on IP platforms to transmit targeted messages. The Kelsey Group estimates the amount spent on interactive ads will more than double from 9% in 2008 to 22.2% in 2013.
Mobile, Internet Yellow Pages and online classifieds, local search, voice search and e-mail marketing are included in the interactive revenue that the research firm said will grow from $14 billion in 2008 to $32.1 billion in 2013.
In contrast, ad media investment in newspapers, direct mail, television, radio, print Yellow Pages, out of home (non-digital), cable television and magazines will decrease from $141.3 billion in 2008 to $112.4 billion in 2013, at a CAGR of -4.5%.
“If this would have been a modest recession, the trend lines would have been softer, but we believe the softness in the economy will accelerate the transition,” said Neal Polachek, CEO, Kelsey Group. “If you go back and look at post-recession growth numbers for all traditional media, you’ll see they bounced back well ahead of inflation and GDP.” Polachek said this forecast recognizes the importance the Internet plays, and that this time traditional media will not bounce back as it did after prior recessions.
Television aimed to create awareness; radio, sales through promotions; newspapers, geared toward retail; and Yellow Pages helped consumers find things to buy. “The Internet can do all those things, and that’s the fundamental shift,” Polachek said. “It’s not just another media. It’s all media rolled into one. That’s very confusing for many people. You can’t say newspapers will be fine because it can do something no other media does. Not true.”
Polachek finds the acceleration of the shift from traditional to digital media surprising, rather than the shift. Experts expected the change, but the economic meltdown is driving it faster.
While Internet television doesn’t put brands in front of 300 million consumers watching the Academy Awards or the Super Bowl on PCs or smartphones today, many of them could in three to five years, Polachek said. Some won’t have a television hook-up either. “While we have been watching the industry make that profound and remarkable shift, the economy will force that change much faster,” he said.
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Ever wonder how paid search (SEM) could be used to drive shoppers in-store, in a fully localized, dynamic and nearly 100% automated manner? The answer to this key question is SmartSearch by ShopLocal. This is a brand new product that the team has been working on for months and months. Drawing from ShopLocal’s own internal high-volume SEM activity and years of experience dissecting the complexity behind localized (versioned) in-store promotions, the team has really been able to come up with a very flexible and unique approach to create:
- Campaign segment creation within the engines that mirror local price and product assortment versioning
- Building of very dynamic ad copy loaded with location, price and category specific references
- Extremely relevant landing page URL generation
- Automated activation of keyword campaigns so as to be able to “pause” and “un-pause” sets of words based upon that type of item being actual available and on sale locally
So the first public “sneak peek” of this product happened just a few days ago in a recent webinar that Greg Sterling (Principle at Sterling Market Intelligence) and Vikram Sharma (CEO of ShopLocal) hosted on local search.
Greg did a great job of summarizing the insights shared during the webinar in two different blog posts:
Also here are the two presentations that were shared with the wide range of agency and retailer attendees:
So super quick post here. The ShopLocal team is in need of an experienced account manager / client service director. Looking to hire and fill this open position ASAP. For a job description check out https://home.eease.com/recruit2/?id=178924 This is actual the role that I started out within ShopLocal over 4 years ago and it was a great way of learning the business and interacting with clients.
By: Jessica E. Vascellaro and Emily Steel – February 5, 2009 – eMarketer
As marketers scale back their ad budgets, some new technologies that make it easier for marketers to track the impact of their online advertising are gaining ground.
Products based on these technologies — such as customized ads that show different products to different users, Web ads hidden inside links in text, and online coupons — are part of what is called “performance-driven advertising.” That’s because the products aim to improve and more precisely measure how a particular ad performs.
While no one format is likely to emerge as a silver bullet for marketers seeking to use their ad dollars more efficiently, the advertising industry is betting on these technologies to increase online advertising spending. Altogether, the U.S. online-ad market is expected to increase 9% to $25.7 billion in 2009, slowing from its year-earlier growth rate of 11%, according to estimates from research firm eMarketer.
Internet retailer Overstock.com is becoming a big user of performance-driven ad products. The Salt Lake City company is planning to spend about $15 million, or 20% of its overall marketing budget for this year, on personalized ads from Choicestream, which makes product-recommendation software, says Overstock Chief Executive Patrick Byrne.
To devise the personalized ads, which Overstock started testing a few months ago, Choicestream relies on data the retailer provides about what customers browse and purchase on its site. Choicestream uses the data to select what personalized products and offers to insert into Overstock ads as they appear to potential customers browsing the Web. Mr. Byrne says that while Overstock hasn’t had much luck with online display advertising in the past, the new, personalized ads drove a sevenfold increase in clicks on the ads and a threefold increase in sales relative to other display ads. “We are ramping it up as quickly as we can,” he says.
Internet giant Yahoo and Teracent, which develops online display-ad technology for clients like Hewlett-Packard, offer customized ad products similar to Choicestream’s. Yahoo’s version, called Smart Ads, debuted in 2007. Michael Walrath, a senior vice president at Yahoo, says demand for Smart Ads has grown during the economic downturn, even though fourth-quarter revenue was relatively flat from the previous year. A new Yahoo service that allows advertisers to target their display ads to users who have searched for particular terms has also gotten a good reception, he says.
Advertisers’ “budgets may be reduced, but the expectations of driving business aren’t being reduced,” adds Mr. Walrath.
Companies like Choicestream, Yahoo and Teracent hope to steal some thunder from search advertising, which remains one of the biggest and fastest-growing ad formats. Since search ads are related to what a person is searching for on the Web, consumers often find them more relevant than other ads, and advertisers typically find them more cost effective.
But as budgets tighten, other formats that can prove they are worth their price are gaining momentum too. Coupons Inc., which makes software to help companies create and distribute online coupons, is among the companies that are benefiting. It has seen a recent surge in interest from advertisers looking for more cost-effective online marketing options, says CEO Steven Boal. Mr. Boal says the company expects to issue $1 billion in coupons this year, up from $300 million last year, and is drawing new customers who appreciate that they pay for the service only when a consumer prints out a coupon.
Committed revenue for the year at Vibrant, which creates in-text ads, has doubled from a year ago, says the company’s CEO and co-founder Doug Stevenson. In-text ads appear when a computer user hover a mouse over links that appear in the text on a Web page. Vibrant charges advertisers only when someone clicks on their ads.
The new ad formats are winning over some big marketers. Over the past year, auto maker Chrysler, whose brands include Dodge and Jeep, has shifted its online-ad spending away from lifestyle sites to sites, such as Edmunds.com, that are geared toward consumers who are in the market for a car, as well as toward performance-driven products like Vibrant’s in-text ads. Chrysler is also continuing to spend on search ads, says Chuck Sullivan, director of interactive at Chrysler.
“The good news about the performance-based media is that it’s very easy to track, and we are able to see what works and what doesn’t work,” Mr. Sullivan says.
Chrysler says the shift has paid off: The percentage of total retail sales attributed to online leads rose two percentage points in 2008 from the prior year.
Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com and Emily Steel at emily.steel@wsj.com.
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