“Companies will spend a record $31 billion this year to advertise everything from toothpaste to home loans on the Internet, supporting countless news sites, social networks, video exchanges and blogs” (Reuters Online 10/12/07).
Online advertising has come of age. It was only in the year 2000 that online advertising expenditures were too small to measure. Zenith-Optimedia, another advertising industry watcher, forecasts that online ads worldwide will grow 28 percent in 2007, while the rest of the market grows at a paltry 3.7 percent. Next year, Zenith-Optimedia forecasts Internet advertising to rise by 21 percent, and climb another 13 percent to $43 billion in 2009.
Yet, even with this fabulous growth Internet advertising would represent only 10 percent of the $495 billion spent on advertising worldwide in 2007 and lag behind advertising spent on newspapers, magazines, and TV. Yet, it is clear that theses advertising dollars will continue to shift to the Internet from TV, radio, and print over the next five years.
This movement from the traditional advertisers to the web may actually happen sooner than forecasted. A recent study by Deloitte and Touche uncovered that two thirds of store visits during the 2006 holiday season were not influenced by holiday advertising. It turns out that most consumers picked stores because of their pre-existing familiarity with the stores and the stores locations. Additionally, the products purchased were researched on the internet.
This means that all the money spent during holiday season for print, radio, and TV advertising was largely wasted. As I read the Los Angeles Times on Sunday morning, I was again reminded how much money is wasted on print advertising; I think I threw away about ten pounds of unread advertising. And, I did not even look at one ad!
So, why do the retail giants waste all this money? I think mostly it is because they have been well-trained by the giant advertising firms. The retailers are budgeted to spend this money and the spending is institutionalized. They do it because it is the thing to do, or so it seems.
What this means is that most companies are very slow to get the message that web advertising is really working and that it will soon be the most important ingredient in an advertising plan. It also means that they are throwing away good money on antiquated methods of advertising such as print ads, radio, and TV. That stuff is so last century.
John Bradley Jackson
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