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With the end of 2008 nearly upon us, it seems that a great number of analysts have become very quiet after any earlier notion that digital would be recession-proof has now been crushed.

Riding out the storm

Unfortunately, no matter how powerful online is as a medium, a downturn still means there will be cut-backs, and the internet is not immune to this, especially where marketing planning is concerned. Only a few weeks ago, eMarketer quietly revised their original 2009 online ad-spending forecast, pushing the growth rate to less than 8%; quite a way off the 14.5% they had predicted back in May.

The general feeling is to agree with a revision of 2009 estimates, but perhaps not so pessimistically. Digital continues to grow, albeit at a slower rate, and this is to be expected given the circumstances.

Normally, in a recession the marketing and PR budgets are the first to be reduced, but Econsultancy’s research indicates that companies and agencies intend to increase their online spending from last year. Equally, consumers are becoming more confident in ecommerce, therefore a rise in online shopping is also expected.

According to research by the IAB, PriceWaterhouseCoopers and the World Advertising Research Centre, the amount spent on internet advertising will be greater than that spent on television by the end of 2009.

Their report even suggests that the UK has the world’s most developed internet advertising market. That’s far from being bad news…

Demise of display?

It is more than likely that only certain areas of digital may become real victims of budget slashing, with display-ads likely to be at the centre of this.

We’ve already seen display slowing down this year, according to the IAB, who reported that the growth of non-search ad spending (display, classifieds, etc) was 14% in Q1 and 5% in Q2. In these times of apparent economic troubles, marketers return to proven channels of driving ROI: pay-per-click, lead generation, even affiliate.

"In economic turmoil, search is more trackable than any other ad format," eMarketer’s senior analyst David Hallerman says. "At this stage, it is tried-and-true format that is supporting online growth."

It’ll be interesting to see how this does affect the display arena. Will CPM decrease? How will the likes of the MySpace Music cope, as they rely heavily upon display as a core funding model?

IPTV

Despite all the problems and issues we’ve seen with IPTV; and the faltering Project Kangaroo and the likes of KateModern being cancelled despite great success, online television viewing is unlikely to slow down in its increasing popularity.

Because of this, there is likely to be an intensity within video advertising, sponsorship or product placement opportunities for digital marketers.

Traffic volumes for the BBC iPlayer, Channel 4’s 4oD and ITV’s Catchup continue to steadily rise and this is unlikely to change.

Threats to security and privacy

Privacy will continue to be an issue, especially as technology is being used more and more to track and capture data, to continue to drive direct marketing.

Whilst this is troubling to users, the biggest issue is likely to lie with security. Already this year we’ve seen malicious virus attacks within MySpace and Facebook and even this week, Microsoft warned the world that Internet Explorer could easily, and had been, hacked.

Online security experts are warning that web-based attacks will rise around 6% per month during 2009, which equates to a 16% increase overall across the whole year. It is difficult to say whether this is a direct result of the recession or not, but with credit becoming less readily available, this could be seen to lead to an increase in card and ID fraud.

This is especially likely to affect ecommerce, so it is advised that online retailers protect themselves as much as possible. This is discussed in our Online Transactions Processing Guide.


Rise of alternative measurement metrics

Tying in with the forecast that social media will continue to grow, is that despite a recessive economy, online marketers will look to alternative ways of measuring success – rather than just a standard ROI model.

This has been mentioned before, but to recap: measurements of success also include customer retention and satisfaction (all the more important in a recession), the rate of customer acquisition and the net promoter score.

The onslaught of social media

While I agree with Drama 2.0’s prediction that Facebook is likely to hit a rough patch in 2009, this does not necessarily mean there will be an overall decline in social media.

If anything, Econsultancy is expecting the opposite. Time and time again, when we meet with companies, we are asked about social media marketing strategies. Whilst this covers social networks, it is likely we will see a rise in businesses actively trying to engage with users through other social means online. This could easily range from the likes of Twitter, through to more simple concepts, such as allowing customer reviews on-site.

It is equally important to realise that the revised estimate of social media spend ($1.8bn to $1.3bn) only reflects advertising expenditure and doesn’t indicate the extent to which companies will run social strategies. For example, this year we saw BA develop their experimental social platform, Metrotwin, which is unlikely to have come cheap.

Social media is likely to see a drop in direct advertising spend, but at the same time will continue to develop and evolve at a rapid pace. We are also likely to experience a rise in widgets and tools, in the expected efforts of encouraging user engagement.

For businesses turning to social media in this way, next year will see a greater expectation upon being able to deliver an evident ROI. Tying in with this, the issues surrounding social measurements and metrics is likely to be an extremely hot topic.


So, overall, 2009 could be a rough ride for the digital industry, but will also present opportunities in the unlikeliest of places. As long as you have good strategy and a solid business model, you should be able to see it through to 2010 and beyond.

Jake Hird

Published 19 December, 2008 by Jake Hird

Jake Hird is Econsultancy Australia's Director of Research and Education. Follow him on Twitter and Google+, connect with him on LinkedIn or see what he's keeping an eye on via diigo

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