Get Ready to Diversify Online Spending

Media is evolving. The ability to slice and dice online audiences and hone in on key demographics – more granular than the typical “female, 18-24” – has become critical given the dynamic online environment and the explosion of user-generated content on the Web.

Each day marks the birth of new Web sites, blogs and online communities. The excitement and popularity of these sites are unmistakable. New data from Internet tracking firm Hitwise revealed that social networking site MySpace accounted for 4.46 percent of all U.S. Internet hits during the week of July 8, edging past popular search engines like Yahoo and Google.

This trend, paired with the Internet playing a more prominent role in the lives of U.S. consumers, is opening new opportunities for advertisers and driving spending to new heights. Forrester Research forecasts online ad spending to rise to $26 billion by 2010.

What should advertisers expect? In the simplest terms: more choice, more control and more content.

Advertisers who previously allocated their entire budgets to search are realizing there is a strategic advantage to diversifying. Also, as new media takes a more prominent role online, curiosity in rich media-infused, in-game or video ads has increased.

In addition to new media, social networks and other sites featuring user-generated content are only just beginning to explode. As more consumers take control over content, marketers will have to conjure new solutions to meet the demands of a Web environment increasingly dominated by user-generated content.

Keeping this in mind, marketers will have to be prepared not only to give users what they want, but to deliver it how they want.

Further, this increase in user-generated content not only will cause media consumption to become more granular, but marketing and ad campaigns will have to adapt to a different demographic model.

Highly personalized campaigns that speak to audiences based on non-PII profiles (non-personally identifiable information) will gain popularity. These marketing initiatives will have more of a “one-to-one marketing” or “one-to-a-group-of-very-similar-people” focus.

As we approach the next chapter of Web history, users no longer will follow the habit of visiting different content sites. Instead, the sites will be presented to users via RSS aggregators. Amid this slight change in Web user behavior, the expanding role of larger advertisers should not be overlooked.

Companies like Verizon Wireless, Dell and Victoria’s Secret have already announced a strong online presence, which in turn will challenge current pricing and ROI models.

But in the end, the Web’s progressive momentum doesn’t mean inevitable failure. In fact, the promise of the online advertising opportunity still rings true, as long as we keep a close eye on what lies ahead.

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