New Study: Interactive Promotions to Triple by 2012

Yesterday a new report was released by Borrell Associates which states that the online promotions category is expected to nearly triple over the next five years from $8 billion last year to $22.8 billion, surpassing all other online advertising categories (paid search, banners, e-mail, audio/video advertising). It states that as in offline promotions, most of the value of online promotions is the cash value of incentives that are given to motivate short-term sales. Sounds like the basic principals of promotional marketing that we all know and love.

The report states that online display ads (Web page banners, pop-ups, etc.) have lost their luster and that spending on them has been generally flat for the past two years. They believe it will peak this year at $12.6 billion, and then begin a precipitous decline to less than half that amount over the next four years. They also state that paid search advertising is likewise facing a luster-loss and they foresee it hitting its peak next year at $16.9 billion, followed by a gradual decline.

To many of us in the interactive promotions business this is great to now have a report that helps prove what we've known all along...online promotions, such as sweepstakes, contests and instant-win games, are highly measurable and when you put the right incentive in front of the right audience, you can get them to act! So while this report may contain predictions that seem strange to some, it makes perfect sense to us. Marketers today need campaigns that can provide measurable results, and this is a way for them to achieve this.

"Online contests, giveaways, coupons and sales of half-price gift certificates are proliferating, many of them bringing in hundreds of thousands of dollars annually and generating warm partnerships between the media company and the advertiser," the Borrell report said. "The utility of the Internet holds fascinating possibilities for local businesses. Local media companies that are genuinely helping those businesses grow, rather than merely selling advertising to them, are well positioned to succeed in this brave new world of marketing."

The full report includes some case studies of local promotions that were implemented successfully. The local medium best positioned to take advantage of the trend could be local TV. A survey from BIGResearch, cited in the Borrell report showed that 38 percent of people that were online were also watching television; more than 20 percent were listening to radio; 9.5 percent were reading a newspaper; almost 7 percent were reading a magazine.

Currently, online promotion spending is only 22% of the total $37 billion overall interactive marketing pie. Overall promotions account for about 60 percent of all dollars spent annually in global marketing. What I believe is an up and coming growing trend is the integration of promotions with social media. The strategy of combining these two marketing tactics is bound to become a big part of the growth that is predicted here over the next five years. I'm interested to see the full Borrell report and if this is in fact one one of their recommendations. It certainly is one of mine.

If you would like to learn more, please contact me. And as always, I welcome your thoughts and comments.