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Forrester: Interactive Marketing Spend to Surpass $61B in Five Years

Interactive marketing spend in the U.S. will grow to $61.3 billion in 2012, from $18.4 billion in 2007 - a compound annual growth rate (CAGR) of 27 percent, Forrester Research forecast in a report issued this week, writes MarketingCharts. Interactive’s share of total ad spend is forecast to increase from 8 percent in 2007 to 18 percent in 2012.

The increases will be “driven by marketers who will leverage a distribution of channels rather than pour new spends into a single place,” projects the report. “This maturing perspective on interactive channels coupled with technology advances will lead to a customer-centric future in which interactive technologies actually infuse all marketing efforts,” according to the report.

“As firms continue to make customer centricity a higher priority, they will recognize that maintaining separate marketing teams to manage different sets of channels that all target the same customers makes no sense,” said Forrester Principal Analyst Shar VanBoskirk.

Among the top interactive marketing vehicles - search, display ads and email - spending on email is expected to be surpassed by online video and emerging channels within the forecast period (see chart, here).

Also according to Forrester’s forecast:

• Search spend is expected to reach nearly $8.1 billion in 2007, followed by online display at $6.1 billion, email at $2.7 billion, emerging channels at $1.0 billion and online video at $0.47 billion.
• The top 2 industries in interactive marketing spending are travel and hospitality ($8.7 billion in 2007), followed by retail and wholesale trade ($6.2 billion).
• Other industries trail significantly behind: financial services ($1.0 billion in 2007), consumer products ($1.0 billion), media and entertainment ($1.0 billion), manufacturing/high-tech ($0.4 billion) and business services ($0.2 billion).
• Search marketing spend is expected to triple in five years, growing at a CAGR of 26 percent to $25 billion by 2012 (see chart, here):
  • Paid search is expected to account for the bulk of that spending, growing from $4.5 billion to $10.1 billion during the forecast period.
  • Search engine optimization (SEO) is expected to grow from $1.9 billion to $8.9 billion.

• Online display advertising spend is expected to grow at a CAGR of 18 percent over the next five years, from $6.1 billion in 2007 to $14.0 billion in 2012 (see chart, here):
  • Interactive or rich media ads are expected to remain the largest segment during the forecast period, with spend increasing from $2.0 billion to $5.9 billion.
  • Sponsorships, the smallest segment at present, is expected to account for the second-largest amount of online display ad spend by the end of the forecast period, supplanting static display ads.

• Email marketing spend continues to grow despite the usual concerns and is expected to grow at a CAGR of 9 percent, from $2.7 billion in 2007 to more than $4 billion in 2012, but will plateau by the end of the forecast period.
• Online video ads debut this year in Forrester’s forecast at $471 million in spend for the year; spending is expected to soar at a 72 percent CAGR to reach $7.1 billion in 2012.
• Driven by social media, emerging interactive channels - also including mobile, games, widgets, podcasts, RSS, etc. - are expected to grow at a CAGR of 59 percent, reaching $10.6 billion in 2012 from $1.0 billion in 2007.

About the study: For its “U.S. Interactive Marketing Forecast, 2007 to 2012” report, Forrester conducted an online survey of 344 interactive marketers as well as in-depth interviews with 25 vendors, media companies, and marketers, including Google, MSN, CBS, MySpace, and Facebook.