Geoff Ramsey�CEO, Co-Founder
JANUARY 14, 2008 – Business statistics can often reveal a great deal of information about a market or trend. A single number, like a picture, can be worth a thousand words. Take 9.3%. That figure represents eMarketer�s prediction for the share of total US media spending going to the Internet this year (in 2007, the share was only 7.4%).
In absolute terms, 9.3% translates into $27.5 billion being spent on various forms of Internet advertising in 2008, according to eMarketer projections. That number, in turn, reflects a variety of trends and industry developments that are expected to take place. For example, advertising on social networks and online video are both projected to grow at double-digit rates this year.
But while video and social networks are among the hottest new ad formats today, they will account for only $2.9 billion, or about 10% of total online advertising dollars projected for 2008.
I believe that these trends, while important, are superseded by three deeper, more fundamental transformations taking place in the media world. These transformations aren�t so easily captured by numbers.
The first of these transformations starts with media fragmentation, which, because of the Long Tail effects of the Internet, is expanding exponentially. However, we are now learning how to harness media fragmentation to serve the needs of advertisers, publishers and, yes, even consumers.
Over the past year, we have seen significant consolidation and simultaneous expansion among the online ad networks. Ultimately, as these ad networks continue to grow and become more sophisticated in their ability to target specific consumer groups, they will allow advertisers to reach large audiences that are stitched together from hundreds or thousands of diverse Web sites. Eventually, advertisers will be able to have their cake and eat it, too: They will enjoy precise targeting of ads without sacrificing reach.
As Adam Gerber of Quantcast has said, in the future, online media buying will be about “the re-aggregation of a fragmented audience that’s actually watching different things.”
The second transformation is that the Internet is becoming the central hub of most media and marketing campaigns�and for good reason. Not only is the Internet now used extensively by every major demographic group, and for a variety of purposes including information, communication and entertainment, but it also allows for a two-way interaction between consumers and marketers that is not found in any other medium. Just as important, the Internet can provide a wealth of measurement metrics to help marketers justify and fine-tune their integrated media plans.
But it is the third transformation that will have the greatest effect since it transcends the Internet and affects all media.
For decades, the ad industry was built on the interruption-disruption model. Consumers understood that if they wanted to experience free content�in the form of television shows, music on the radio and magazine articles�they would have to put up with ads, most of which were perceived as irrelevant, boring, annoying or all three. In this standard construct, ads were seen as a �necessary evil� to support the content consumers really wanted to see.
But the interruption-disruption model is dying out, thanks to shifting consumer trends. Consumers are increasingly in control of their media content and can easily eradicate ads they don�t want to see. They also have less trust in advertisers and their messages. Further, consumers are creating their own content with the help of blogs, social networks, wikis and other digital-communication platforms.
As a result, advertisers and their agencies who want to engage with today�s consumers will have to start turning their ads into content. Ultimately, they will need to be able to produce content that is so compelling, relevant and entertaining that consumers will seek it out and want to share it with others. The new ad model is about creating great content and finding clever ways to embed it in the fabric of communities and content platforms where consumers are hanging out and actively participating.
By gathering the latest research and news from over 1,000 sources, eMarketer has established itself as the world’s leading provider of internet and e-business statistics. eMarketer’s Web site is at www.emarketer.com.