First published November 12, 2009 in Mediapost’s Search Insider
In about three weeks, we’ll be gathering in Park City, Utah for another Search Insider Summit. Between now and then, I’ll be providing a sneak peek at some of the content that will be covered. On Day 1 of the Summit, Jordan Rohan from Clearmeadow Partners and Mark Mahaney from Citi Investment Research will look both backward and forward six months to help us get a fix on lessons learned and what we should be paying attention to. I asked both Jordan and Mark to provide some hints of what they’re seeing in their rearview mirrors and what’s coming down the road.
Mark Mahaney: The 6 Months that Was….
I’ve talked previously about the economic belly-flop being the best thing that could have happened to digital marketing. Mark agrees: “I think that the recession accelerated the adoption of digital advertising, because it accelerated the adoption of performance-based advertising.”
In evolution, adversity speeds up the pace of change, and the past 18 months have certainly been adverse for marketers. There has been a lag between the uptake of digital advertising and its potential. Case in point, PEW estimates the average person spends almost 5 hours a day online, more than with any other medium. Yet advertisers have only allocated about 12% of their budgets to digital advertising. Print still dwarfs digital in most budgets, and we only spend a half hour a day with some type of publication in our hands.
The advertisers that move to digital are almost guaranteed some impressive “early entry” quick wins because of this adoption lag. When you start measuring and comparing performance, digital will shine. And search will shine brightest of all. I’m not sure “performance-based advertising” is an inclusive enough label, but it’s the one that’s stuck to this point. And by that measure, digital performs like a rock star.
But if the economy was the dark cloud, and the adoption of digital was the silver lining, there’s still one more nasty surprise hidden inside the silver lining for digital agencies: advertisers’ expectations are higher than ever, and in some cases, they will be impossible to meet: “It’s as if the recession taught us never to pay full retail again, and never to buy CPM again.”
The laser focus on performance may set a standard that’s so demanding, even search might be hard-pressed to meet it. I believe this is a temporary attitude that will relax over time — but the fact is, the economy hammered several nails in the coffin of traditional advertising attitudes.
Mark Mahaney – The 6 Months to Come
Mark hedged his bets by picking two horses in the upcoming race for the hottest trend over the next 6 months, and neither come as a surprise: “The galloping market share of smart phones has to finally, perhaps, translate into the move to mobile search that we all know is coming. Certainly, the smallest hints of adoption are starting to show up in the search usage logs, but it’s still infinitesimal compared to desktop search.”
And finally, Mark urges us to pay attention to social media advertising. Again, there are a lot of questions still to be answered, but study after study (the latest being FEED 09 from Razorfish) is rolling out now talking about the importance of social in the digital marketplace.
Jordan Rohan – Don’t Look Now, But We’re Recovering…
Jordan had one theme that stretched back 6 months and projects 6 months in the future: growth returns to media (aka: what a difference a year makes). Jordan provides some supporting evidence:
- Ford is profitable again
- CBS is charging advertisers double the rates (scatter TV ads) of a year ago.
- Apple has its most profitable quarter ever, thanks to the sale of 7.4 million iPhones.
- Google buys AdMob for $750 million in stock.For more on Mark and Jordan’s crystal ball, join us for the Search Insider Summit in Park City.