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In what seems to be a frequent occurrence, research firm eMarketer has cut its estimates for ad spend on social networks.

In May, the firm estimated that spending on social network ads would reach $1.4bn. That number has been lowered to $1.2bn.

And eMarketer believes that 2009 will see continued slower-than-anticipated growth as well. It has revised its projection for total spend in 2009 from the previous projection of $1.8bn to $1.3bn.

According to eMarketer, MySpace and Facebook account for a huge chunk of the money being thrown at social network ads - 68% of all spending in 2008. eMarketer believes that this year, spending on MySpace and Facebook will be down 22.5% and 20.8%, respectively, from its previous projections.

Recession is cited as a key contributor to this downward trend.

In some sense, MySpace and Facebook might, on the surface, seem to be the least affected by the slowdown in the social network ad market. After all, they're dominant players and will still capture much of the spending. But MySpace is News Corp.'s prize and slower growth probably won't be appreciated by News Corp. shareholders. And while Facebook has raised hundreds of millions of dollars in capital, hundreds of millions of dollars more may be required sooner than later.

Of course, I'm not entirely surprised that eMarketer continues to cut its estimates for social network ad spend. Recession coupled with notoriously poor campaign performance makes social network ad spend a logical place to cut budgets.

But this is about more than social networks. It's about experimental marketing.

As I noted last week, many marketers are naturally finding that experimental marketing programs are an ideal place to cut back.

Although the lack of ROI is problematic, this isn't just about ROI and companies in the social network ad market aren't the only ones that should be concerned.

Experimental marketing is problematic for a number of reasons beyond ROI:

  • Comfort is key in bad economies. When times get tough, uncertainty fills the air. Right now most of us are asking, "How bad will it get?" When one increasingly lacks control, there's a natural tendency to seek control wherever it can be found. In the advertising space, expect to see a lot of marketers flee not only to 'quality' but to what they know and what they're comfortable with.
  • Experimental marketing requires lots of time and effort. To produce accurate results, experiments must be planned well, conducted well and analyzed well. Serious experiments by their very nature require a significant investment of time and energy. This investment does cost money and when there's far less money floating around, there's less rationale for experimenting. What's tried and tested simply makes the most dollars and sense.

At the end of the day, I expect that other forms of experimental online marketing will experience a spending slowdown much like the one social networks are experiencing. Obviously social networking (and 'social media') are the most hyped forms of experimental online marketing in recent memory but that doesn't mean that other experimental marketing isn't going to be affected too. Spending on virtual worlds seems vulnerable in my opinion and according to blip.tv's Dina Kaplan, budgets are "now gone" for many experimental online video models as well.

In my estimation, for digital marketers well-versed in SEO and PPC campaign management, 2009 is going to be as 'solid' a year as one can have in a painful recession. For those banking on today's experimental marketing models becoming tomorrow's essential marketing models, I quote Borat - "Not so much."

Drama 2.0

Published 15 December, 2008 by Drama 2.0

237 more posts from this author

Comments (1)

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Michael Leander

Interesting, thanks for sharing. The forecast is hardly surprising, but does any one keep track of the accuracy of these forecasts - post forecast period?

almost 8 years ago

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