Online Marketing’s Net Effect: Less Overall Ad $

What might ironically be called the “net effect” of online marketing will be the reduction of ad spending overall. Smart brand marketers know that traditional media are still important and must be combined with online to achieve maximum impact today, in this era of fragmented audiences. So that suggests an overall increase in marketing spend or at least a wash, as some ad dollars are shifted to the Internet.

Yet, the overall impact over time is likely to be a decrease in ad spending for two reasons:

1. Competition and downward price pressure on ads online, which will in turn cause discounting in traditional media. In addition, online ads are less expensive than traditional media (although that’s apples to oranges)
2. Online marketing efforts that are essentially free in some respects (social networks, YouTube, etc.)

As money shifts online to varying degrees to follow audiences there isn’t a 1:1 shift in ad dollars because of the differences in the economics of online marketing and the range of options available to marketers suggested above.

Here’s the latest eMarketer online ad forecast, derived from various primary sources: