Enhanced targeting and CRM opportunities will elevate online spend at the expense of direct mail, outdoor and radio advertising As online advertising revenues soar from £50 million at the end of 1999 to £625 million by 2004, direct mail will be the most heavily impacted traditional marketing tactic. Companies that currently advertise online will increasingly do so, leading to a 33% fall in direct mail expenditure by 2004. Over the next four years online will also increasingly take spend from outdoor and radio advertising, and will begin to dent press advertising. These are some of the findings of the new book-length report ‘Online Advertising Grows Up: Exploiting a New Marketing Medium’ by Fletcher Research, the UK Research Centre of Forrester Research.
Caroline Sceats, analyst at Fletcher Research comments, “The internet will win because of the precision targeting it offers advertisers. However, targeted online advertising requires media owners to better understand their users, and advertisers should insist that they are provided with consistent and measurable audience data.”
The report also finds that internet ‘pure plays’ will rely heavily on TV and press advertising in the short-term to maximise exposure, but Fletcher advises that they must be ready to grow their internet ad budgets strongly once their brands are sufficiently well established. The percentage of budget committed by ‘dot-coms’ to online advertising will need to increase significantly, and Fletcher predicts total online ad spend by pure plays to rise from the current £24 million to £285 million by 2004, accounting for 35-40% of their overall ad budgets.
Sceats continues, “Online retailers and publishers need different online ad strategies. Both should use email and banners to grab consumers’ attention and drive response. Retailers should use pop-ups for attracting shoppers, but publishers must concentrate on content partnerships and sponsorship programmes to succeed. “Clicks-and-mortar companies will leverage their offline brand strengths and use the internet to build better relationships with customers and lock out competitors. Market leaders will use the power of profiling to understand better how their customers think and behave across all channels, and use that information to offer customers tailored services at premium rates,” she adds.
