By now I think everyone is agreeing that online display ad spending is going to slow down in 2009. MediaPost reported a slow down of 6% through Q3 last month and when the numbers come out for December it will likely be more of the same.
I’ve talked here before about a shift of offline budget to online in a tough economy and justified (or at least attempted to justify) why I believe that this will happen. If you take a look at overall marketing budgets, most research suggests that online advertising budgets represent less than 10% of total marketing dollars being spent. And while it’s been said that lower traditional media prices may keep the ad dollars in traditional media, and a prediction by J.P. Morgan showed a slowdown in display advertising, I’m sticking with my initial stance: online budgets and specifically search and display will be the last to go when channels start getting trimmed.
This isn’t the 2001 recession. Online media isn’t a fad. Online media isn’t optional. It’s an absolute must. I can understand experimental media budgets getting the axe. I can also understand sticking to the basics in traditional media and doing what has always worked. This isn’t a time to be guessing with ad dollars. That’s why the strategy I find quite funny is that advertisers are currently pumping more dollars into paid search and cutting budgets in display media. eMarketer has recently published what we’ve been seeing for a long time: display boosts search performance. The spikes and dips in performance driven marketing channels such as search often times are directly related to display advertising efforts. To cut out branding online is essentially to stop creating demand, and at the very least to cease creating awareness. Search is there to harvest it, but without informing customers in the first place where will the demand come from?
Try a paid search only strategy while playing in an industry, say auto insurance, where competitors are active in display advertising and see how your paid search ad click through rates fare against the competition. It’s not pretty. On the other hand, when fairly significant display advertising campaigns are running for clients we usually see a lift in both traffic levels and in conversion in other online marketing channels, particularly search.
So while budgets get tighter and advertisers continue to inspect the ROI on their display advertising buys, the CPM model is going to be increasingly harder to justify on its own. You’ll need to take a holistic approach to looking at the situation in order to find that display advertising plays an important role even in ROI focused advertising efforts. Of course it’s all a matter of how it’s being measured and priced, but that’s for another post.
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