Interactive Marketing Budgets Increase for 2005:

Interactive has finally proven itself, and budgets are increasing. A dramatic shift in the marketing mix is taking place at this moment. Recently, Mitsubishi decided to curtail its television advertising but plans on increasing interactive budgets significantly. Other major marketers are following suit. This is not a coincidence. Interactive media enables marketers to determine cost per acquisition and other metrics in the most precise manner possible. This is one of the key strengths of the medium. In addition, marketing professionals rate the Internet high in brand building, customer acquisition, customer retention, positive ROI performance and efficient target marketing.

Online budgets will most likely be distributed among the following categories over the next five years based on a survey of top marketing executives (by percentage of respondents, source: Millward Brown Marketing & Media Snapshot, 2004):

28% Web Advertising
19.2% Email
16.3% Search
13.9% Online Promotions
9.8% Affiliate Programs
12.6% Undecided

Of course, this is a small list and doesn’t include other interactive tools such as DVDs or advergaming but it does show items of major interest. Online classifieds, search and web display advertising alone will grow to over $10 billion in 2005 and is predicted to grow to $16 billion in 2009. Look for multi-channel retailers such as Barnes and Noble and Home Depot to increase their budgets for interactive and integrated campaigns. These types of retailers will dominate the world of e-commerce.

The increase of broadband penetration among consumers is directly correlated with the growth of e-commerce transactions. Both numbers have doubled within the past four years. Holiday shopping is estimated to have increased by at least 23% in 2004 and when the final numbers are reported, don’t be surprised if online shopping shows an even greater increase. This means increased budgets for all companies participating in the consumer e-commerce marketplace. Companies such as Amazon, E-Bay and Overstock.com will continue to increase expenditures, as their online business model proves itself in the marketplace.

What are you planning for 2005? Maybe you have already placed a significant amount of marketing dollars towards interactive. Have you? If not, then the time is now before your competition gains the advantage. Regardless of the industry you are in, word travels fast and the word is “interactive marketing works, and it is time to utilize it.” Don’t be left behind.