A $65 Billion Advertising Shift?
More and more marketers are pulling out of traditional ad channels and spending it on themselves, says a new study. Outsell's Anthea Stratigos explains.
Anthea Stratigos is chief executive of Outsell Inc., a media research and advisory outfit she co-founded in 1998. Its most recent annual marketing study predicts $65 billion will be siphoned away from traditional advertising channels in 2009 and spent instead on companies' own Web sites and Internet marketing. Forbes spoke with Stratigos about where the market is going:
Forbes: Even in an age of trillion dollar bailouts, $65 billion is a hefty sum. Can you put this in context?
Anthea Stratigos: To scale that, compare the total U.S. TV and cable advertising revenue for 2009, which is about $66 billion. The marketing dollars companies now spend on their own sites is equivalent to all TV ad revenue for the year. Eight years ago we said that the Global 2000 would be the dot-coms of tomorrow. That's what's playing out.
What aspects of their own sites are these marketers developing?
Page content, Web analytics, search engine optimization and site design. Most of them have invested in social networking platforms to create direct dialogues with their consumers.
What companies have really succeeded in marketing themselves by talking to customers?
Ducati has taken most of their traditional marketing and advertising dollars and re-focused spending on their own Web marketing and social networking, connecting the company with Ducati owners, with great success. Lego does most of its product design now with input from its huge community of Lego builders, which constructs their brand in a unique way.
At the Cannes advertising festival last month, Steve Ballmer said he didn't think global advertising is in a recession but has been "reset" at a lower level and will not rebound. Do you agree?
Advertising which has left the news industries, for example, is not going to come back in its same shape or form. But you can still make a case for cross-media buys and the combination of display ads plus search optimization as being effective.
The "free content" model has been a great way to market a site like The Huffington Post, but is it sustainable?
The question for The Huffington Post is how long it will take it to become profitable and whether it will continue to need outside funding. What happens if their capital dries up before the model is secure? Offering content for free creates a commoditization effect, putting downward pressure on the sector. I don't know any industry that has survived on being free.
The newspaper sector is moving toward a very different strategy: paid content. What's your view of the coming wave of paywalls news organizations say they are in the process of erecting?
I have a bit of a bias toward paid content. Organizations who move their content behind paywalls are going to find out very quickly where they stand with customers. When you charge for what you offer you quickly find out the true value of your product.