Thursday + Gregory Huffstutter = The Ad Man Answers
Q: What’s going to be the hottest media forms in 2008?
A: Look no further than social networking and online video, as reported by Heidi Dawley in MediaLife...
The wonderful thing about the internet for users is that it's ever-changing.
The not-so-good thing is that the pace of change is hard for marketers to keep up with, and that's no more so than with social networking.
Social networking exploded in 2007, led by MySpace and Facebook, but marketers are still struggling to figure out how to capitalize on that growth, even as they hike their ad spending on those sites. That will be among the big challenges of 2008.
“We are in a period of experimentation,” observes David Schatsky, president of JupiterResearch, the research outfit.
“Social media as a phenomenon, and what a social media experience is, continues to evolve. If Facebook and MySpace didn’t change, then 2008 would be a year when marketers could figure out how to use them. But they keep changing.”
As it was, social networking dominated 2007, following several years of huge growth, and it will again dominate in 2008, as the big internet wave. This will occur against a backdrop of rising broadband penetration and double-digit growth in ad spending.
“If I had to choose the most interesting thing about 2008, the social media and social marketing stuff has the greatest buzz around it. It is compelling,” Schatsky says.
The second big wave will be internet video, which started with the success of the user-generated video sites but quickly spread to all manner of web sites. Two-thousand-seven was a huge year, and 2008 will be huge as well.
Yet it will be a challenging year for marketers, and in ways not dissimilar to those for social sites. The challenge will be in coming up with an advertising model uniquely suited to online video.
Is it TV? Is it the movies? Is it the internet? Or is it something entirely different? What forms of ads work best?
Of the two, social media and video, social media has the deeper roots. MySpace launched in 2003, and by 2005 it had grown so that Rupert Murdoch’s News Corp. jumped in to purchase it for $580 million.
In 2007, the momentum of social media was picked up and carried by the surging growth of Facebook, following a change in rules that expanded its user base from college kids to anyone over 13.
More strong growth is ahead. EMarketer is forecasting that the percentage of U.S. adult internet users visiting social networks at least once a month will grow from 37 percent in 2007 to one half of the adult internet population in 2011.
Among teens, eMarketer forecasts a rise from 70 percent to 84 percent in the same period.
As for ad spending on these sites, eMarketer expects that to nearly double in 2008, to $1.6 billion from $920 million in 2007. And even then it will be but a small part of total internet ad spending, pegged to reach $27.5 billion in 2008.
For online video, both JupiterResearch and eMarketer are forecasting that ad spending will quadruple over the next four years up from $775 million this year, while also remaining but a small part of total online ad spending.
Borrell Associates, a company that researches local internet, also sees fast growth. “There are a lot of conditions combining to make that a rapid growth area,” says Colby Atwood, president of Borrell, who cites the high uptake of broadband as one.
In fact, Atwood sees the move into online video as part of a larger trend. Advertisers, he believes, are beginning to move their ad money away from traditional forms of online advertising, like popups, banner ads and listings. Instead they are moving more money into paid search, email and online video. This is something that he expects to continue in 2008.
“These areas are all popular because they are easier to measure, and easier to calculate return on investment,” says Atwood.
It is also a symptom of the fact that folks are learning how to use the web in ways they hadn’t thought of initially.
“As people learn how to take advantage of the web, we will see more and more advertising that we just couldn’t have done in the past medium. A lot before has looked like TV or newspaper advertising," says Atwood. "We are growing past that now."
Happy Holidays and New Year! May all your marketing strategies be tastier than your aunt's eggnog.
Gregory Huffstutter has been punching Ad Agency timecards for the past decade, working on accounts like McDonald's, KIA Motors, and the San Diego Padres. He recently finished his first mystery, KATZ CRADLE. The first 100 pages of his novel are linked here. For general advertising questions, leave a comment or send e-mail to katz @ gregoryhuffstutter dot com with 'Ask The Ad Man' in the subject line.
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