netactr

Forrester Research published their forecast for interactive marketing (US Interactive Marketing Forecast 2007 to 2012, by Shar VanBoskirk, Forrester Research, October 10, 2007). Interactive marketing includes display ads, email marketing, paid search, and emerging marketing technologies such as online video, social media, and mobile.

Interactive advertising comprises 8% of today’s total ad expenditures, while audiences spend 29% of their media time online. One is tempted to conclude that eventually these ratios have to catch up with each other … but they don’t need to. If interactive ads were more effective in engaging the audiences and generating sales, advertisers wouldn’t have to spend proportionately more when they shifted their budgets from offline to online. But it is fair to assume that interactive advertising will continue increasing its share of the overall advertising pie (reaching 18% in 2012 according to Forrester).

Forrester expects Paid Search to continue dominating the interactive marketing category in terms of revenue, showing the second-largest CAGR of 26%. Paid search is an effective awareness vehicle because it allows advertising at a point in time when the prospect is looking for information. Compared to display ads search is more precise - the offer is presented only to those people who are actually looking for information.

Social media, bucketed under emerging channels, is projected to grow at 59% CAGR. Forrester does not show any ground-breaking uses for social networks beyond advertising on MySpace and blogging, but even with such humble goals they project an almost 12x increase in social media ad spend by 2012, making it one of the fastest-growing ad spend category (Mobile marketing comes in first with a 14x increase, but starts with just 1/3 of social media revenue base).

An interesting point is made about the early adopters of emerging marketing technologies (social media and video) coming from the ranks of aggressive director-level marketing professionals taking executive ownership of select marketing technology implementation projects to expedite their path into the CMO seat.