Thursday, January 08, 2009

Gasta Opinion: Why the forecasters are wrong about digital in 2009

While the pundits may be singing a similar tune when it comes to digital advertising's immediate future, here are a few points they may not have considered.
It's the first full work week of the New Year, and already I'm tired of the constant vacillation in moods concerning the health of internet marketing.
Depending on whom you believe, digital marketing will either follow newspapers into oblivion in 2009, or it will be hit hard but not quite as hard as other media. Hardly any of the pundits give it a positive outlook. And that's a shame, with self-fulfilling prophecies and all…
There are quite a few assertions, though, that are fairly consistently questionable from pundit to pundit when it comes to predicting digital's future. Among them:
1. Failing to grow at the same rate as last year is some sort of failure -- If digital advertising grew at 10-15 percent last year, and it will hit only 7-9 percent growth this year, that's not a failure. Accelerated year-over-year growth for any market sector, whether it be manufacturing, biotech engineering, or financial services, is unsustainable in the long term. Things have to slow down at some point. If digital advertising slows down but still grows in an economy where the word "Depression" is still commonly used in headlines for op-ed pieces, I think we're doing rather well, thankyouverymuch!
My other issue with this is that more marketers are doing things with digital that are not classified as advertising and probably don't get tracked by the prognosticators. Suppose your recommended solution to an e-commerce client is not to buy a bunch of ad banners, but instead to pay to have their digital shelf presence enhanced. Is that advertising? No. Does it address the business problem your client is trying to solve? Most definitely. Will such a deal get picked up by the powers-that-be who track internet spending? Probably not.
2. Video and social media need an ad model -- It's true that in order to make money the way that Yahoo, MSN, and Platform-A do, Facebook will need to improve its ad model. And yes, something will have to come along that can replace pre-roll and overlay ads in video. But hinging digital's growth potential on these ad model conundrums is a mistake, I think.
If video advertising won't scale appropriately (and I do believe it will to a certain degree in 2009), marketers might turn to other non-advertising ways to leverage video. Viral strategies, video syndication, and content sponsorship are all ways of making video work in ways that enhance the bottom line without registering on someone's radar as an ad spend.
As long as social networks can continue to capture everyone's attention the way they have in the last few years, I doubt the lack of an ad model will put them under. Not as long as I'm spending what I do on things like Facebook gifts and Facebook ads. I think there's a lot of potential in something like Facebook ads -- not the big banner deals they do, but the smaller, targeted buys that would appeal to small business marketers. I've used Facebook ads both to recruit people for positions at Underscore and to try to sell my home. In both cases, sub-$100 investments have yielded huge gains. If Google still has plenty of potential to roll up many thousands of small, self-serve ad deals in order to make money, why not Facebook?
3. Performance-based advertising will be where the growth is -- I've seen this prediction made by many of the pundits, followed by some Google-flattering comment about how search will drive modest growth in 2009. In the short term, this might be the case, but I think we've already seen what happens in digital when too many advertisers shift their focus to DR and performance-based digital media. Things quickly get crowded. Clearance issues abound. Lead and sale volumes drop sharply unless concessions are made with respect to price and environment. This is how we weathered the last downturn, and display never really went away and experienced a rebirth when the economy turned around and marketers learned to trust digital again.
I question these three assertions, and I'm skeptical that the equation is as simple as many of the pundits make it out to be. I'm also optimistic for another reason: Analysts and pundits who don't work in digital on a day-to-day basis often have trouble understanding the dynamic of how marketing budget decisions are made. I see a lot of potential out there for marketers and brand managers to come to the conclusion that their diminished budgets can't afford last year's levels of broadcast, and for those marketers to consider digital-heavy or digital-only options for marketing campaigns.
However, it turns out in 2009, I don't think we should resign ourselves to slowed growth or declines this year. People who work in digital tend to be people who thrive in chaos. There's certainly a good deal of chaotic behavior out there in the floundering economy, and I wouldn't be surprised if we figure out how to capitalize on it this year.
Tom Hespos is president of Underscore Marketing and blogs at

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