04 February 2008

$24 billion and growing

Over the past five years, advertising on the Internet and other digital media (video games, mobilephones) has increased substantially. Growth of digital advertising has far out-distanced traditional media (print, TV, outdoor), and continues to accelerate as I write this blog post. According to eMarketer, online ad spend in the United States alone is expected to be $24 billion this year, growing at 22%.

[According to a GroupM forecast, total ad spend in the United States is expected to grow by 3.7% to reach $169 billion this year.]

The rate of growth in digital advertising is not the only thing that is changing. More importantly, what is changing is the way advertising and marketing campaigns are being – and going to be – executed. Delivering personalised marketing messages with accuracy far superior to traditional mass media advertising – made possible by a partnership between creative and technology.

To this end, the Google-Publicis partnership (see my previous post) is no surprise. It has evolved over the past few years, setting its first milestone last year when Publicis bought over Digitas, the largest independent digital ad agency in the world. Soon after, Microsoft bought over aQuantive, the second-largest digital ad agency.

The idea behind such moves is, no doubt, to occupy a dominant position in the digital advertising/media space. And, to me, the strategy seems a cut above traditional ad agencies setting up their own digital advertising divisions. I bet we are likely to see many more collaborations, mergers and acquisitions of the Google-Publicis kind in the days to come.

The good news is that the digital advertising business is large enough, and has the potential, to accommodate everyone. Google-Publicis may now have a ‘first mover’ advantage, but others will soon follow with their own strategies.

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