Report: Interactive marketing to reach 21% of marketing spend by 2014

BOSTON: Interactive marketing will reach nearly $55 billion, representing almost a quarter of all marketing expenditures by 2014, according to a new report from Forrester Research.

BOSTON: Interactive marketing will reach nearly $55 billion, representing almost a quarter of all marketing expenditures by 2014, according to a new report from Forrester Research.

 

The increase in interactive won't expand advertising budgets but rather come at the expense of traditional advertising as marketers shift dollars to interactive marketing, such as social media, mobile marketing, and search and e-mail marketing and display ads, the analysts found.

 

Of the 200 marketers surveyed, 60% said they would fund an increase to their interactive marketing budget by shifting money away from traditional marketing.

 

Some of the reasons for this shift were poor economic conditions in which interactive tools are believed to be cheaper and more effective and measurable; increasingly interactive customer relationships; more strategic marketing organizations; a moribund print inventory; and proof that interactive marketing works.

 

The biggest growth area for interactive is expected to be social media. The spend on interactive campaigns through social networks, combined with agency fees for creating social media assets (community sites, internal blogs), will exceed $3 billion by 2014, a compound annual growth rate of 34%. And as that investment increases, marketers will “improve how they use social media to engage — not just reach — target audiences. This means more spend on multichannel social media campaigns instead of just buying banners on community sites,” according to the report.

 

As an example, the report pointed to an Earth Day initiative in which General Motors' Chevrolet brand and MySpace created a virtual tree widget that grew when “watered” online through visits and downloads.

 

The report surmises, “With dollars moving out of traditional media toward less expensive and more efficient interactive tools, marketers will actually need less money to accomplish their current advertising goals. Digital will usurp ad money even for big brand advertisers.”

 

It also warned traditional agencies that “can't transition from pushing out messages to nurturing customer connections aren't long for this world,” and will be usurped as the AOR for big brands by interactive firms like Razorfish.

 

Jennifer Houston, SVP and lead for Waggener Edstrom's Studio D, said the report only means more opportunity for PR, in particular as the walls between the “broader marketing disciplines are breaking down.”

 

“Advertising often worked as a megaphone… and the megaphone approach no longer works,” she said. Instead, it's about reaching audiences directly, and PR can help to not only find out where those audiences exist but also where their influences are coming from, and how influence travels, Houston added.

 

But Houston agreed that those in the PR industry who fail to innovate “will be left behind.” She cited tools like WE's Twendz as an example of what her firm his doing to stay relevant.

 

Companies interviewed for the Forrester report included MySpace, Yahoo, Microsoft, and TNS Cymfony.

 

Shar VanBoskirk, VP and the lead analyst on the report, blogged about the findings yesterday.

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