Online Advertising Is No Longer Experimental

I know this isn’t news to some people and is really boring to others, but I spent some time comparing the Interactive Advertising Bureau’s recently released 2009 full-year report (it came out just a few weeks ago) to its 2008 full-year report and found some confirmatory trends.  Maybe this isn’t “blog worthy” but I always find it reassuring when research data supports my gut-feeling.

Non-Internet advertising spend declined 17% while Internet-based mediums remained virtually flat (in $ million)

Anyway, it wasn’t surprising that in the wake of a significant economic crisis, firms cut back on their advertising expenditures from 2008 to 2009.  Not adjusting for inflation, this amounted to a 3.4% decrease year-over-year.  However, when I reorganized the IAB data by type of media, it was comforting to see how relatively insulated Internet-based advertising has been from the recession.  As shown in the graph to the left (this is all IAB data, but I’ve reformatted it), expenditures on Internet marketing remained nearly constant despite a huge 17% decline in non-Internet formats.

In other words, firms cut back their overall ad budgets, but didn’t touch the amount they spent on the Internet.  Furthermore, it’s not a big leap to infer that Internet advertising is a critical component of companies’ overall strategies, and when times are tough, other formats (e.g. radio, newspapers, magazines, out-of-home) are slashed to maintain spending on the Internet.

As a percentage of all advertising expenditures, Internet captured 2% more of the tota

This stability in Internet advertising despite the chaos in other sectors manifests itself in the Internet’s stealing of marketshare (see chart to the right).  From 2008 to 2009, the Internet captured an additional 2% of total advertising revenue, and most projections have this share growing further over the next several years.

Within overall Internet marketing, my former company, Conductor, has done some great research on how search engine optimization is becoming a pillar – and essential component – of the larger marketing ecosystem (and no, they don’t pay me to say that!).  Customers increasingly turn to sites like Google and Bing for information so organizing websites in a way that enables search engines to crawl and index data is becoming increasingly important.  Check out Conductor’s SEO Research Center which highlights specific trends within the S&P 500, and also how the need to measure (i.e. justify) expenditures is driving the Internet’s success.

Regardless, this recession has proven what many already thought: online advertising isn’t just an experiment any more, but rather a real marketing strategy that is here to stay.