Advertising budgets to continue moving online in 2009 as other channels collapse

While overall marketing budgets will drop in 2009 as the recession begins to bite, a number of recent studies have forecast that digital advertising spend will continue to increase.

The latest Marketing Week YouGov poll reveals that 42% of UK marketers foresee their digital spend increasing. 21% say they will cut TV advertising, 26% print and newspaper spend, and 29% magazine advertising. Outdoor, radio and cinema advertising will fare no better, with 18% predicting budget cuts for outdoor and radio each, and 17% for cinema.

Things are no different Stateside, with UBS Securities Research projecting spend on traditional media such as broadcasting, print and outdoor to decline 11% in 2009, its biggest drop in 60 years. The research firm’s assessment for 2009 is that “only the Internet should remain positive.” Online advertising is expected to grow 7% in the United States in 2009 and, by 2010, should make up 14% of overall ad spend.

Typifying the move from offline to online marketing spend is Electrolux. Whereas the company has been spending 80% of its £50/$73 Million pan-European marketing budget on TV and posters, in 2009 its investment in television will be slashed to less than 40% and outdoor to a maximum of 10%. Alexander Darwazeh, senior brand director for Europe, the Middle East and Africa, predicts that, while marketing budget will remain the same depending on market conditions, “we’ll be moving aggressively out of broadcast and billboards and into customer relationship management, the internet and experiential.”

The shift of advertising budgets to digital is leading to traditional agencies desperately trying to move into the electronic world to survive. BooneOakley, for instance, Charlotte, North Carolina’s largest agency, is setting up an in-house online division. “You can’t even say this is the future anymore,” says John Boone, agency principal. “It’s the present. Agencies that aren’t doing this won’t be around very long.”

Consumers are turning to the internet to save money on their shopping on both sides of the Atlantic. Both Amazon.com and Amazon.ca have reported their best ever holiday shopping seasons. Seattle-based Amazon.com said it sold more than 6.3 million items on 15 December, 2008, its peak day. UK online retail sales are expected to grow at a compound annual rate of 12% through to 2012 with cashback, voucher code and comparison shopping sites predicted to become particularly popular.

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