Corey Katir: Internet Advertising, Online Advertising, eMarketing Analysis |
Internet Advertising Analysis Part 8; A Big Market from Which to Gain Share
For now, Internet marketing services are but a tiny portion of a huge market. The Internet accounted for about 3% of U.S. advertising in 1999. By 2005, we expect this to grow to 14%. When considering the entire U.S. marketing budget of $390 billion (advertising plus marketing services), the Internet accounted for only 1% in 1999. We expect this number to quadruple by 2005.
Are We Underestimating the Size of Internet Advertising and Direct eMarketing? For example, in the U.S., traditional advertising spending is expected to have been $151 billion in 1999, and Internet advertising is expected to be $4.0 billion, or 3% of the total. We believe this number could reach 14% in 2005 — larger than radio advertising. But the addressable market is even larger. We estimate that the total U.S. marketing budget (advertising plus marketing services) to be $389 billion in 1999, only 1% of which is Internet Advertising and direct eMarketing. We believe Internet marketing could reach 6% of this bigger number by 2005.
Internet as a Portion of Total Advertising (1999)
What Kind of Medium Is This
In the beginning, the Internet took a content-based targeting approach mimicking traditional media's approach, as advertisers tried to fit the Internet into existing models for magazines, cable and broadcast TV advertising. The prevailing question was whether advertisers should narrowcast on niche sites, broadcast on search engines, or both.
The development of portals allowed advertisers to do both narrow and broadcasting conveniently at one location. Advertising networks sprang out of a portal model as a way for unaffiliated sites to gain scale and clout with advertisers.
Targeting
Content targeting - as done on television - is the least valuable form of targeting for advertisers.
Demographic targeting - as done in direct mail and some magazines - is more valuable. Behavioral targeting now possible in real-time on the Internet is the most valuable form of targeting to advertisers. The sources of the largest, most robust databases will likely be the winners. Companies are now trying to marry online and offline data to better target their messages and media to the right person, at the right place, at the right time.
Convergence and Scale Rich media brought on by broadband - may lead to higher response rates, better branding capability, and more creative possibilities. A convergence of television and the Internet, with interactive advertising, is likely to lead to larger budget commitments. The largest advertisers are only just beginning to enter the online fray. The new interactive media will likely lead to significant perturbations in their business models, brands, and media choices, brought about by a new understanding of their customers. The future interactive agency and advertiser must be ROI-driven. To do so, they must be able to integrate campaigns, data, and technology across a wide variety of new, traditional, and converged media across geographies and cultures. The tail may wag the dog as information gleaned from interactive advertising will have implications for other marketing decisions on pricing, positioning, and promotion.
Continue with:
Part 9; Internet Advertising; Right type of Medium and Targeting ,
Part 10; Broadband brings Rich Media , Part 11, Rich Media Studies , Part 12; What Could K.O. Internet Advertising , Part 13; Email ,
Part 14; Advertising or Direct Marketing , Part 15; What Does the Internet Advertising Market Consist of , Part 16; Rich Media still has some drawbacks ,
Part 17 Inventory and Concentration , Part 18; Market Share and Concentration Data , Part 19; Global Impact, Part 20; Residential and Business Use ,
Part 21; Pageviews , Part 22; Advertising vs. Direct Marketing , Part 23; Investment Conclusion
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