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internet thing: Promotions Marketers will triple their spending on contests Apr 30, 2008 The big online buzz in recent years has been over paid search as it rose up out of nowhere to become huge, overtaking display advertising. It was the hot thing. Here's the next hot thing: online promotions--such things as games, contests, coupons and public relations. A new forecast has online promotions nearly tripling over the next five years, to $22.8 billion in spending, to become the dominant form of online advertising. Display advertising will begin declining after this year, in terms of spending, and search will do so after next year. “It is dramatic, but it is something that has been happening over all media for decades,” says Gordon Borrell, CEO of Borrell Associates, which issued the forecast. Borrell says promotions now make up 60 percent of marketing spending by companies, and he expects that share to grow further in the coming five years, with online promotions playing catchup. Currently, online promotions account for only 22 percent of online marketing expenditures. Borrell is forecasting that online display advertising will peak at $12.6 billion this year and then decline sharply to just over $5 billion in 2012. Paid search advertising will peak next year at $16.9 billion, predicts Borrell. “Search will flatten and then decline in favor of new forms of spending, like promotions -- something a lot more interactive.” Among various forms of promotions, games and contests will be the big gainer, growing from 10.5 percent of online promotional spending last year to 28.4 percent in 2012. But the biggest area will remain online discounts and rebates. Last year, they made up 41.4 percent of spending. By 2012 that share will dip to 38.7 percent.
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