Interactive marketing to hit $55B in five years

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Interactive marketing will hit $55 billion and represent 21% of all marketing spending by 2014, as marketers continue to shift dollars from away from traditional media and toward search marketing, display advertising, e-mail marketing, social media and mobile marketing, according to Forrester Research.

In the US Interactive Marketing Forecast, 2009 to 2014, released July 8, Forrester found that marketers faced with budget cuts and the need for immediate sales in recessionary times turn towards interactive tools that are less expensive, more measurable, and better for direct response than traditional media.

“In today's economic climate, marketers are shifting dollars downstream, so they are much more focused on tools that drive immediate response and sales,” said report author Shar VanBoskirk, VP and principal analyst at
Forrester.

Sixty percent of marketers surveyed indicated they would increase budget for interactive by shifting money away from traditional marketing. Unfortunately for direct marketers, the direct mail budget was cited more than any other traditional medium as the place to cut.

Forty percent of marketers said they would decrease the direct mail budget to fund increased interactive efforts; that's compared to 35% citing newspaper budgets, 28% citing magazines, and just 12% indicating they would dip into the TV budget. Telemarketing held its own: just 7% of marketers said they would decrease investment in telemarketing to fund interactive marketing initiatives.

Search continues to lead the pack among online tactics. Spending on search in 2009 is expected to total 15.4 billion, or 59% of the overall interactive pie. It is expected to grow at a compound annual growth rate of 15% to $31.6 billion in 2014.

“Marketers can't get enough of search's direct response value,” VanBoskirk said. She said search continues to be a cost effective and targeted way to drive sales.

The interactive shift has had an overarching effect on the industry at large: overall advertising spending is decreasing, VanBoskirk said.

“As interactive grows, marketers' overall need to invest in advertising diminishes. You can do more with less money,” she explained.

That means marketers can use the surplus that used to go toward advertising on other programs.

“We will see an increase in spending on things like customer relationship building activities, the in-store experience, the call center, the Web site experience, the things today that either don't get enough budget or are managed with another budget," VanBoskirk said. "Marketing will have greater ownership over that relationship. That's good for customers and marketers.”

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