Word of mouth marketing up, total media ad spend down
As marketers slash ad budgets in this economy eMarketer has predicted a decline of more than eight percent in U.S. total media ad spend in 2009, after a nearly four percent decrease in 2008. But, the research firm reported, word-of-mouth marketing is growing, primarily due to the rise of new media channels, such as blogs, social networks and other online communities. PQ Media found that US word-of-mouth spending on online communities increased 26.6 percent in 2008 to $119 million. While PQ predicts a slowed pace from its annual 37.6 percent each year since 2003, the firm said that word-of-mouth marketing will continue to rise nearly 15 percent each year until 2013.
Monetizing mobile ads
MySpace decline leads U.S. social media ad spend down
U.S. ad spending on social networks will fall 3 percent in 2009 to $1.14 billion in 2009, from $1.18 billion in 2008. That’s a significant turnaround from previous years. Spending grew an estimated 33 percent in 2008 and 129 percent in 2007.
The reason, says EMarketer which released the results, is due to a drop in spending at MySpace.
EMarketer estimated in its December 2008 forecast that marketers would spend $630 million to advertise on MySpace in 2009. That estimate has now been reduced 15 percent to just 495 million.
News Corp. executives said in a May 6 conference call with financial analysts that ad revenues fell 16 percent at Fox Interactive Media (FIM) in the January–March 2009 quarter, compared with the previous year. MySpace makes up the bulk of FIM’s revenues. (News Corp. does not break out MySpace revenues separately.)
MySpace’s woes are not reflected in estimates for other social networking companies. Ad spend on Facebook is expected to increase 9.5 percent in 2009, to $230 million, while US ad spending on widgets and applications is projected to reach $70 million, up 75 percent from 2008. U.S. spending on all other social network sites combined is expected to rise 1.5 percent to $345 million.
EMarketer has also issued estimates for ad spending on MySpace and Facebook outside the U.S., the first time the research firm has reached beyond the U.S.
Overall, marketers worldwide are expected to spend $520 million to advertise on MySpace in 2009, with $495 million coming from the US and $25 million from other markets. Non-US spending on Facebook is expected to reach $70 million this year, for a total of $300 million in 2009.
2009 is so over—let’s focus on 2011
Online research company eMarketer recently cut its online ad spending forecast for 2009 to $24.5 billion — or 4.5 percent over 2008. Initial predictions saw a 8.9 percent growth to $25.7 billion.
If the company’s right, that’s the lowest growth rate since the dot-com crash.
And in an interview with Media Life Magazine, eMarketer senior analyst David Hallerman predicts double-digit growth again. But not until 2011.
“Our projection of 4.5 percent is a classic good news-bad news situation,” Hallerman said. “The bad news is it will be the lowest positive gain ever for U.S. online ad spending.
“At the same time, when you compare it to any other medium, it’s the only one showing positive growth this year. The assumption of some economic recovery happening is only part of that. The other part is firmly based in the shift of marketing dollars online because it’s more accountable and more targetable.”
Why newspapers should consider local social media sites
Newspapers and media companies looking to build traffic should strongly consider creating niche social network sites.
An EMarketer report this morning cites Children with Diabetes, a Johnson & Johnson-owned ad-supported social network for families who have children with diabetes. Nearly one-half of the site’s traffic comes from search, according to Joseph Natale, vice president at Children with Diabetes.
Children with Diabetes has some 32,000 pages of content optimized with words like “children,” “diabetes” and “juvenile diabetes.”
A newspaper could create a similar site but focused on the publication’s local community.
Newspapers should note that social media sites are not as strong on increasing brand building and reach as other areas of marketing and sales. A survey of executives by the Marketing Executives Networking Group found that 85.4 percent cited customer engagement as the main benefit of social media marketing, followed by direct customer communications (65 percent), speedy feedback/results (59.9 percent) and learning customer preferences (59.1 percent).
Brand building came in at 48.2 percent and reach was lower at 37.2 percent.
Half of all Internet users to watch video online in five years
We all know that online video is hot. Viewership is expected to grow by more than two-thirds in the next five years, from 563 million in 2008 to 941 million in 2013, says EMarketer. The 2013 estimate represents just over one-half of the 1.8 billion consumers expected to use the Internet that year.
That number is skewed a bit, though, by Western adoption rates. In Australia, Germany, India, Japan, the U.K. and the U.S., more than three-quarters of consumers in surveyed in Q3 2008 by IBM Global Business Services said they watched video on their PCs. And that’s today. By 2013, the sky’s the limit.
The explosion of online video viewership has been truly dramatic. A study by the USC Annenberg School Center for the Digital Future and the World Internet Project found that as recently as 2007, a majority of Internet users in eight out of the 13 countries surveyed (including the U.S.) said they never downloaded or watched online video at all!
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