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Run with the Bulls at Your Own Risk
July 23, 2008

Another bullish forecast of Web spending, this time via the L.A. Times:

Everyone knows that online advertising keeps growing and growing. But according to a report being released today, it’s growing so fast that in 2008 it is projected to surpass ad spending on TV, radio and movies combined for the first time ever.

But wait, hold the iPhone:

Outsell Inc....counts the money companies spend on their own websites as part of their advertising budgets, because websites are ostensibly used for marketing. Its data indicates that companies are expected to spend $105.3 billion online in 2008, which beats the $98.5 billion they’re projected to spend on TV, radio, and movies. But that isn’t quite as much as the $147 billion they’re likely to spend on print media, up 12% from the previous year.

Hum. Well, that’s good news for print, but one wonders if conflating a company’s internal Web site spending and external marketing spending is entirely fair. This is especially true when you consider that a lot of internal Web spending is on developing a basic infrastructure—not that this is 1996 again and everyone is building a Web site from scratch, but Web 2.0 has different technological underpinnings and “Web development” is a far more involved process than simply slapping up a site. There is rich media, there is database integration, there is XML...the list goes on. One wonders if all the bullish online marketing forecasts of the past decade have included this line item. Because there are consequences, as the Times article makes explicit:

Online advertising is expected to grow 12.3% in 2008, but much of that money will be spent on companies’ own websites, rather than on marketing agencies or search or display ads. That’s not good news for advertising agencies, said Chuck Richard, Outsell’s lead analyst.

Oh, and the Times story ends on a rather sad note, especially in light of its own recent troubles:

Advertisers will still spend the most money on print media in 2008 – but it’s not a shining ray of hope for the newspaper industry. Companies will spend 35.5 percent of their budgets on print media in 2008, and will spend nearly a third of that on newspapers. That’s down 4 percent from the previous year.

The Lesson: For rank and file marketers—or for anyone but industry analysts who need PowerPoint fodder—I’m not sure that spending numbers by medium are of any great value. All they really do is highlight overall trends, and if there is one thing I have learned over the years, it’s that a trend is not a strategy, and that a lemminglike rush to join the pack (to mix my zoological metaphors) isn’t necessarily an effective approach. Also, these data rarely identify how much spending is multichannel-related. After all, if you are producing a multichannel marketing campaign, you are likely going to be using many of the same assets from medium to medium, so the spending-per-medium equation is a fairly complex one. In a nutshell, when encountering spending forecasts, take them with a grain of salt, if at all.

Posted by Heidi Tolliver Nigro on July 23, 2008 | Comments (0)