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For starters, online has come of age as a medium since the early 2000s. IAB President Randall Rothenberg observed recently that in a typical recession, "above-the-line dollars [move] below the line." When budgets are tight, pay-as-you-go approaches (say, point-of-sale promotion) are more appealing than betting on what may come (mass-market TV spots). In the last recession, online advertising had yet to prove itself as a bona fide option, above or below the line. Now, it's credibly done both.
Second, the brightest aspects of online advertising's appeal are the special strengths of digital as an ad medium. One is accountability. That's what continues to give search advertising its momentum, fueling the growth (albeit slowing) of market leader Google. Every marketer can determine what a search-based "click-through" is worth by calculating the impact on sales. It helps, too, that marketers pay only for search ads that result in a click-through. No surprise, search will expand by a healthy 15% in 2009. Another attribute of digital is the compelling user experiences based on rich integrated media formats and built-in interactivity. That's why industry analysts expect spending on online video ads to grow by a robust 45% next year, revised down only slightly from earlier estimates.
Third, it's an iron law of marketing that word of mouth is the most powerful medium that money can't buy. Online environments are, of course, rapidly becoming social media, where word-of-mouth communications travel at lightning speed and exert ever more influence on consumer behavior. No one, including social networking giants Facebook and MySpace (NWS), has cracked the code on word of mouth—or its monetization. But that doesn't mean they're not trying. Thanks to the huge numbers of business people who use it, Facebook has overtaken LinkedIn as a top business networking site. It's testing B2B marketing concepts like the recently introduced "VISA Business Network," which enables small business owners to interact with one another and advertise efficiently on the site. Last summer, MySpace also began targeting small businesses with a self-service model for advertising placement. (Only 1 million of 23 million small businesses in the U.S. advertise in any way online.)
Fourth, marketers are spending digital dollars to create "earned" rather than "paid" ad placements. Paid placements occur when brands buy ad space from existing online publishers. Earned placements often require that brand marketers create media vehicles of their own. Sometimes, earned media can take shape as the online equivalent of guerrilla marketing, in which brands create engaging online experiences—such as Pedigree's Dogs Rule Web site, which, with its agency TBWA\Chiat\Day, created a multifaceted online hub of services, community, and videos for owners and lovers of dogs. Others are less playful and more sobering, like Chevron's (CVX) partnership with the Economist Group to create Energyville, an online game designed to educate consumers about trade-offs between global energy resources and demands and their environmental implications.
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