My Days of .Com
Future of Interactive Advertising

Financial Crisis meets the Interactive Advertising

Written by Mihai Dragan on Tuesday, November 18th, 2008 ( 4 responses )
Tags: 2008 interactive trends, 2009 advertising predictions, communication groups, dentsu, havas, Interactive Advertising, interactive agencies, interactive agencies group, interactive communicaton, interactive vs conventional, interpublic, media convergence, omnicom, publicis, wpp

Unless you’ve been living under a rock in the last year, you have already heard about this thing called “The Financial Crisis”. I am also sure there was nothing too joyful about it.

So – what is this Financial Crisis and how are we, as interactive advertising people, affected or helped by the monster?

The Basics

First of all I will get into the basics of the Financial Crisis, nothing too complicated, just a simple “Financial Crisis 101″. Here goes:

a. The Recession is NOT the Apocalypse.

Although you may have heard some rumors regarding this, there is nothing spectacular about recession. It’s just part of the usual economic cycle.

You know when you get a lot of money, and spend it on useless stuff? You borrow some bucks from your friends, only to give them back at the next pay check. That’s exactly what happens with American economy. Only on a larger level.

b. So, are the recession and financial crisis the same thing?

Well, no. Financial crisis is the thing that happens when your friends stop giving you money because you didn’t pay them back the last time. Also – you don’t have a job and the money you make can barely give you a decent living.

That’s pretty much USA these days. The recession usually happens on a period of 10 years. The country needs some money in excess, borrows from other countries and than pays back in the next 10 years.

60 years have passed since the USA financial super-bubble started to inflate. Guess what … it went “Pop!”. The crisis has just began and it will affect a lot of people next year too.

c. Where can I hide?

The bad thing about this is that the whole world will “benefit” from it. Some will win and some will lose. In the bigger picture, you can look at the Crisis as the “wealth redistribution program”. Probably China and India (unlike the USA, they have a rising economic trend) will gain more and more influence. Probably the world will invest less in cars and more in green technology (we already see the rising demand for anything that is “green”, and it was predicted that green technology will outpace the Internet growth in 2008).

For what I am concerned I am sure the world will invest more into Interactive Advertising and less in Conventional Advertising, starting 2009. Which brings us to…

The Interactive Advertising Industry in 2009

Basically, if you want a safe place to keep your money until the times get better, look for an interactive agency that showed a profit in the last year and has a growing trend. Invest there.

What are the stats ?

I’ve put together some data to get the conversation started:

• Business to Business marketers will increase their Internet spending by 16% in 2009, compared to 6% in conventional advertising, according to eMarketer;
• Small and Medium business will increase their online buying activities by 40% due to lower costs and better services;
• Top 100 Advertisers moved 1 billion dollars to Internet from the conventional media (a huge 33% growth, as reported by AdAge);
• TV Spending is still the king but is loosing the war, with a 4.2% decrease to 66.9 billions;
• China is the country with the most Internet Users in the world (253 million users) and loves mobile (according to the Statistical Survey Report on the Internet Development in China, released in July 2008);
• Top ten UK Interactive Agencies have totaled a £ 304.608.921 turnover last year;
• 60% of the top 100 interactive agencies are independent.

These seemingly disparate data will lead us to some very interesting conclusions you might or might not agree on. Let’s see them.

We will have to learn Chinese

No self respective interactive agency won’t be able to compete in a globalized market without some .cn expertise. 253 million users (and rising) are not to be ignored. At the moment the things are not very clear there but I am sure the government will ease up on censoring the Internet, allowing it’s citizen to enjoy more virtual freedom, as well as a chance for Internet related jobs and services.

Many conventional agencies will die

It does sound a little rough but I am sure clients won’t allow too many unaccountable spendings in 2009 with the recession at its peak. Advertising spending will rise overall as the market will be more and more competitive but some agencies are just not trained for results.

The new interactive advertising

Interactive advertising has proved successful and many clients will need the same accountability in off line advertising as they have online. The theory of media convergence will prove itself in 2009. We will start seeing displays that record the users preference, billboards that target your mood and contextual TV advertising.

Global budgets handled by Interactive Agencies

Most interactive agencies are way more budget conscious than conventional ones. Clients love that and they might consider this move.

Conventional Agencies acquired by Interactive Agencies

Interactive agencies are now the Cinderellas of Advertising but the times are changing and I would bet on at least three huge take overs or mergers next year.

Huge advertising groups will start fading. At least one new Interactive Communication Group will rise.

The likes of WPP, Omnicom, Interpublic, Publicis, Dentsu and Havas will have big problems trying to hold their position in the new market, as capital is scarce, clients are ever demanding and the companies they run are inflexible. I sense that there will be at least one group with a interactive-based business philosophy that will rise to challenge the giants. Who will that be?

The world needs results in these times of economic struggle. Conventional has lost its spark and Interactive Advertising is getting better and better. These “new” (some are over 10 years old) agencies are growing at a faster rate anyone has predicted, just as the Internet does. The future holds many secrets but one thing I’m sure of: the interactive advertising is here to stay.

If you would have to place your bets, what would you bet on ?