• November 2, 2011
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Marketing Dollars Move to Interactive

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Advertiser spending on interactive marketing will reach $77 billion—the amount spent on TV advertising today—by 2016, according to a Forrester Research five-year interactive marketing forecast.

Currently, marketers spend roughly $34.5 billion a year—or about 16 percent of their total ad spending—on interactive campaigns. In the interactive channel, marketers spend about $18.8 billion on search marketing, $11 billion on display advertising, $1.6 billion on mobile marketing, $1.5 billion on email marketing, and $1.6 billion on social media. 

Those five interactive outlets will grow to 26 percent of all advertising spending by 2016, notes Forrester analyst Shar VanBoskirk, in "U.S. Interactive Marketing Forecast."

According to VanBoskirk, the growth will be fueled not only by greater acceptance of interactive channels, but also by marketers' hiring larger interactive teams; growing excitement about emerging media, including mobile, social, and online video; the cost-effectiveness of interactive marketing; and customer obsession with online media and portable devices, such as smartphones and tablet PCs.  

"Search will continue as the largest piece of the interactive marketing pie, growing to more than $44 billion over the next five years," VanBoskirk writes in the report. "However, it will lose share, from 55 percent to 44 percent of all interactive spend, in 2016, as marketers refocus their search marketing strategies on getting found by users through any medium—not just search engines."

Among other channels, TV ads accounted for 34 percent of ad budgets in 2010, followed by the Internet, at 14 percent; newspapers, at 12 percent; radio, at 8 percent; and magazines, at 5 percent.

This year, spending on mobile paid advertising and search will surpass that of email and social media and will soar at a 38 percent compound annual growth rate, to $8.2 billion by 2016, the report says. "Our 2009 bet that mobile marketing adoption would hit its stride in 2011 proved right on," VanBoskirk notes.

The medium will continue to grow as marketers create more relevant mobile ads, mobile devices become even more mainstream, and buyers embrace more mobile commerce and the advertising that drives it.

In addition, the report details an uptick in spending on email marketing, nearing $2.5 billion by 2016, with a 10 percent CAGR during the next five years. That increase comes as businesses launch interactive programs, create calculated campaigns, and upgrade email analytics.

According to the report, the combination of social media management technologies, agency fees, and spending on paid integrated social network campaigns will rev social media at a 26 percent CAGR during the next five years. Still, social media will hit only $4.4 billion and account for just 7 percent of interactive spending by 2016. The small level of growth will continue to be fueled by the relatively low cost of social media management as well as higher spending on social media–monitoring programs.

What does all that growth mean? VanBoskirk says, "We expect this growth to help firms become adaptive, kill off daily deals, reemphasize marketing's four Ps—packaging, placement, price, and product—and turn consumer electronics into audience-targeting tools."

Total Ad Spending on Interactive Marketing (includes search marketing, display advertising, mobile and email marketing, and social media)

  • 2011 $34.5 billion (up 16%)
  • 2012 $41.0 billion (up 18%)
  • 2013 $49.6 billion (up 20%)
  • 2014 $58.5 billion (up 22%)
  • 2015 $67.9 billion (up 24%)
  • 2016 $76.6 billion (up 26%)

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