Interactive Marketing Spending to Hit $76.6 Billion in 2016
Forrester Predicts Huge Growth in Mobile, Search Along With Daily Deal Fatigue
By Cotton Delo, AdAge
A new report by Forrester Research forecasts that U.S. interactive marketing spending will reach $76.6 billion by 2016, equal to TV spending this year and comprising 35% of all advertising. That's a big jump considering that this year interactive will comprise 19% of all spending, according to Forrester.
Search and display will continue to be the biggest pieces of the interactive spending pie, comprising 44% and 36%, respectively, in 2016, though search will have lost share from 55% in 2011. Mobile paid advertising and search will experience astronomic growth and are surpassing email and social this year, according to the report.
"This is the first year we saw growth due to interactive tools really gaining legitimacy in the mix," said Forrester analyst Shar VanBoskirk, noting that search, display and email have become well-established lines in marketers' budgets.
The report, "U.S. Interactive Marketing Forecast, 2011 to 2016," projects the overall compound annual growth rate of interactive marketing spending at 17%, but the fastest-growing category is mobile at 38%, set to reach $8.2 billion in 2016. It attributes the surge to a push toward creating more targeted, dynamic mobile ads instead of so much repurposing of online ads; the rise of mobile commerce; and experimentation with new ad formats for tablets.
Search marketing will continue to be the biggest piece of the interactive spending pie -- rising from $18.8 billion to $33.3 billion between 2011 and 2016 -- but will actually lose share of all interactive spending in the same period, falling from 55% to 44%. Ms. VanBoskirk said the rise of biddable display media, the growth of mobile and investment in social networks and alternative search networks such as Facebook, YouTube and ratings and reviews sites such as Yelp will be factors in the drop-off of search's interactive market share.
Investment in display advertising will rise from $10.9 billion in 2011 to $27.6 billion in 2016, driven by greater than 20% compound annual growth rates in rich media, text listings and online video. The rise of biddable display media and improved online ad management tools are cited as key factors.
Email marketing is projected to have a growth rate of 10%, bringing it to $2.5 billion in 2016, but the total spending is kept down because of its low cost of reach 1,000 consumers, or CPM. And widespread adoption of social media will continue, reflected in a projected 26% growth rate, but total spending will reach only $5 billion in 2016 as it's also an inexpensive tool. (The report notes that listening platforms cost $5,000 to $10,000 per month, but a paid search budget can run up to $500,000 to $3 million per month.)
The report also predicts the rise of subsidized hardware from media giants such as Google and Yahoo, which would look to embed ads into the displays of smartphones, tablets and e-readers in return, creating the possibility of enhanced user targeting for advertisers. It also foresees the onset of daily deals fatigue.
"That will create consolidation and thin out the number of daily deal offers that are available," Ms. VanBoskirk said.
Interactive Marketing To Garner $77B By 2016
By Gavin O'Malley, Mediapost
By 2016, advertisers will spend $77 billion on interactive marketing -- or as much as they do on TV today, according to a new report from Forrester Research.
By then, search marketing, display advertising, mobile marketing, email marketing and social media will account for 35% of all ad spending.
"We expect this growth to help firms become adaptive, kill off daily deals, re-emphasize marketing's 'p's,' (product, price, place, and promotion) and turn consumer electronics into audience-targeting tools," says Forrester analyst and report author Shar VanBoskirk.
A number of key factors will enable this growth over the next five years, according to VanBoskirk, chief among them: larger interactive teams for marketers, publishers and service providers.
Over the last three years, for example, one unnamed financial services firm Forrester consulted grew its interactive team from 18 to 70 people. "Now, it is a top advertiser on many display networks, has tripled its email marketing volume, and has a social PR effort underway," VanBoskirk reports.
Along with sustained excitement about emerging media, Forrester also expects marketers to increasingly invest in interactive channels because they will generate better results over time. Furthermore, firms looking to differentiate in the age of the customer will invest to create customized experiences across their customers' preferred touchpoints, Forrester believes.
As a result, Forrester projects that by 2015, smartphone adoption will grow 150%, while 82 million consumers will own a tablet.
That said, digital's rising tide is not guaranteed to continue lifting all boats. For instance, while search will continue as the largest piece of the interactive marketing pie -- growing to more than $33 billion over the next five years -- it will lose share from 55% today to 44% of all interactive spend by 2016, Forrester predicts.
In place of search, marketers will increasingly focus their search marketing strategies on "getting found" by users -- through any medium -- not just search engines. Investment in paid search, search engine optimization agency fees and SEO technology will taper to a 12% compound annual growth rate, according to research.
Representing a boon for display advertising -- investment in contextual listings, static image ads and rich media ads (including pre-roll, mid-roll, and post-roll online video) will reach $27.6 billion by 2016.
All display categories -- except for static image ads -- will post greater than 20% CAGRs, which will boost display to 36% of interactive spend in five years, Forrester boldly predicts.
Also of great significance, spending on mobile paid advertising and search has surpassed email -- and social will rocket to a 38% CAGR or $8.2 billion by 2016. This will be driven by more relevant mobile advertising, increased tablet adoption and mobile commerce.
Forrester is predicting the end of daily deals, as "standing out above the clutter becomes harder for marketers as ad exposures grow."
Added VanBoskirk: "Consumers will grow so conditioned to micro-impulse offers they'll lose practice at considered decisions ... Facing a cultural descent into maladroit judgment, employers (and spouses) will blacklist impulse deals to keep people intentional."
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