Forrester Research has released a new report forecasting interactive marketing spend in the U.S. for the next five years. The report, authored by Shar VanBoskirk, is available in its entirety on the Forrester Research website.

The report details how certain industries currently spend, and projects how they will spend, on interactive marketing. It also offers some interesting insights for businesses trying to ensure they are either catching, or keeping up with the Joneses. VanBoskirk talks more about it on the Forrester Research blog for Interactive Marketing Professionals.

Current Interactive Marketing Spend - Courtesy of Forrester Research, Inc. (Click for larger version)

Current Interactive Marketing Spend - Courtesy of Forrester Research, Inc. (Click for larger version)

The chart above shows what Forrester estimates brands are currently spending on Interactive Marketing. Display advertising is banner ads and similar, standard ads on websites. The numbers aren’t all that surprising, but think about where the industry is when you think of these insights:

  • Display ads continue to dominate consumer goods and media and entertainment, among other categories. This despite the fact consumer trends indicate ads simply don’t work as well as other interactive areas.
  • The industries that have been using the web the longest – travel and hospitality – spend three times as much on search marketing as display ads and almost 30 percent of their overall budget on Interactive. That’s 10 percent more than any other industry.
  • Social media spend is last or second to last in all categories except business services. Social media consultants and agencies selling social media fall into that category.
  • Email marketing, the interactive version of cash cow direct marketing, appears to be almost an afterthought across the board.

It doesn’t surprise me that media and entertainment and consumer goods industries continue to buy display ads more than other Interactive media. They’re not only conditioned to buy ads to communicate their message and under the influence of media planning and buying firms who only make money when they buy them, but they’re the final bastion of people who don’t understand consumers have flocked to arenas like social media to get away from the bull horns of traditional marketing. Are they getting better? Probably. Do they have a way to go? Yep.

Travel and hospitality industries have a few years experience on these others and are spending a ton more on search marketing and a ton more total dollars. I’ll give you a hint, GPG folks … they’re onto something.

While the cost of social media essentially equates to labor costs, there should still be more dollars devoted to it across the board. I say this not because I want to make more money (though I won’t turn it away) but because social media — building relationships with your consumers — is the one interactive marketing method that is sustainable and cost efficient in being such. You’re investing in the lifetime of your consumers here. The dollars will go a lot farther.

And if you aren’t taking advantage of good email marketing, you need to stop what you’re doing and figure that piece out fast. Email marketing done right, delivered to the right audience and with the right message is still the best way to consistently reach people in the interactive space.

These are my ideas on how companies and industries should look to change some of these numbers. You’ll have to go purchase the Forrester Report to see if their predictions match up with what I’m recommending. (Warning: Forrester Reports aren’t cheap, but do come with a three-week, money-back guarantee.)

In the meantime, what do the numbers tell you? What surprises you? What seems odd? A penny for your comments …


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About Jason Falls

Jason Falls

Jason Falls is the founder and chief instigator for Social Media Explorer's blog. He is a leading thinker, speaker and strategist in the world of digital marketing and is co-author of two books, No Bullshit Social Media: The All-Business, No-Hype Guide To Social Media Marketing and The Rebel's Guide To Email Marketing. By day, he leads digital strategy for CafePress, one of the world's largest online retailers. His opinions are his, not necessarily theirs. Follow him on Twitter (@JasonFalls).

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Comments on Social Media Explorer are open to anyone. However, I will remove any comment that is disrespectful and not in the spirit of intelligent discourse. You are welcome to leave links to content relevant to the conversation, but I reserve the right to remove it if I don't see the relevancy. Be nice, have fun. Fair?

  • dmattcarter

    I think it's interesting that most companies are spending in the interactive equivalent of traditional marketing channels. (Search Marketing being the notable exception). Why? Because it's easy to predict your audience count, number of impressions, etc.(much like print or direct) and then experiment and optimize if you fall short (Search marketing included).

    Social Media and Mobile are still unknown quantities. There's no – as of yet – accurate predictive modeling to help CMO's feel comfortable with the COST. I say “cost” rather than “investment” because I think that's how SM is being viewed in the C-Suite. An “investment” is something with a somewhat predictable return. The best and brightest in our industry strive to create ROI models and I think deep investment in the category is dependent on their/our success.

    • http://socialmediaexplorer.com JasonFalls

      Excellent points, Matt. Interesting to think of social media as a cost
      rather than investment, when I would pitch it the opposite way. Guess
      that's why we need to come up with a better answer to the ROI
      question. Thanks!

  • dmattcarter

    I think it's interesting that most companies are spending in the interactive equivalent of traditional marketing channels. (Search Marketing being the notable exception). Why? Because it's easy to predict your audience count, number of impressions, etc.(much like print or direct) and then experiment and optimize if you fall short (Search marketing included).

    Social Media and Mobile are still unknown quantities. There's no – as of yet – accurate predictive modeling to help CMO's feel comfortable with the COST. I say “cost” rather than “investment” because I think that's how SM is being viewed in the C-Suite. An “investment” is something with a somewhat predictable return. The best and brightest in our industry strive to create ROI models and I think deep investment in the category is dependent on their/our success.

  • http://www.socialtality.com dmattcarter

    I think it's interesting that most companies are spending in the interactive equivalent of traditional marketing channels. (Search Marketing being the notable exception). Why? Because it's easy to predict your audience count, number of impressions, etc.(much like print or direct) and then experiment and optimize if you fall short (Search marketing included).

    Social Media and Mobile are still unknown quantities. There's no – as of yet – accurate predictive modeling to help CMO's feel comfortable with the COST. I say “cost” rather than “investment” because I think that's how SM is being viewed in the C-Suite. An “investment” is something with a somewhat predictable return. The best and brightest in our industry strive to create ROI models and I think deep investment in the category is dependent on their/our success.

  • http://socialmediaexplorer.com JasonFalls

    Excellent points, Matt. Interesting to think of social media as a cost
    rather than investment, when I would pitch it the opposite way. Guess
    that's why we need to come up with a better answer to the ROI
    question. Thanks!

  • http://www.jasperflorist.ca Florist Edmonton

    I found this post to be very interesting, I bookmarked the page and put a link to this page on my website. Thanks.

  • bradycohen

    Jason, I enjoyed reading your point of view on this data. I think that when considering the content development time for social media, and the cost associated with that time, the numbers in the chart would change and show that more is being invested in social media than this data suggests. Something else to consider is that while email marketing appears to have a small slice of the pie, it may be due to the extremely low cost to use email. Another way to look at this that might be more interesting is by impressions and not by dollars. It might tell a completely different story.

    • http://socialmediaexplorer.com JasonFalls

      Interesting point Brady. I would assume, though, that the time
      invested in content production is included in the social media cost.
      But I do agree with you that looking at the results. Then again, there
      would be somewhat of a difficulty in measuring that from Forrester's
      point of view. They can project budgets. Pageviews, etc., may not be
      as easy.

      But you're right. It would probably show us a very different picture.

  • bradycohen

    Jason, I enjoyed reading your point of view on this data. I think that when considering the content development time for social media, and the cost associated with that time, the numbers in the chart would change and show that more is being invested in social media than this data suggests. Something else to consider is that while email marketing appears to have a small slice of the pie, it may be due to the extremely low cost to use email. Another way to look at this that might be more interesting is by impressions and not by dollars. It might tell a completely different story.

  • http://twitter.com/mlwebco Michael Locke

    Great post, and nice blog by the way. I totally hear you and I totally get social marketing. I love where it's heading and really like the potential it offers for small business consultants such as myself. But it's early and I still find it to be a struggle to get small businesses to jump on board. Most companies that I've run into are scared to put any real budget into social because they can't really quantify the ROI. But it's changing and I like the forecast (no pun intended) of where it's heading. Good stuff. Thanks for the data.

    • http://socialmediaexplorer.com JasonFalls

      Thank you, Michael. Appreciate the feedback.

  • http://twitter.com/mlwebco Michael Locke

    Great post, and nice blog by the way. I totally hear you and I totally get social marketing. I love where it's heading and really like the potential it offers for small business consultants such as myself. But it's early and I still find it to be a struggle to get small businesses to jump on board. Most companies that I've run into are scared to put any real budget into social because they can't really quantify the ROI. But it's changing and I like the forecast (no pun intended) of where it's heading. Good stuff. Thanks for the data.

  • http://socialmediaexplorer.com JasonFalls

    Thank you, Michael. Appreciate the feedback.

  • http://socialmediaexplorer.com JasonFalls

    Interesting point Brady. I would assume, though, that the time
    invested in content production is included in the social media cost.
    But I do agree with you that looking at the results. Then again, there
    would be somewhat of a difficulty in measuring that from Forrester's
    point of view. They can project budgets. Pageviews, etc., may not be
    as easy.

    But you're right. It would probably show us a very different picture.

  • http://www.facebook.com/priit.kallas Priit Kallas

    What numbers are these in the table? Forrester estimates (in millions), millions of what? Billions maybe? What year? 2009?

    • http://socialmediaexplorer.com JasonFalls

      The numbers are millions of dollars and 2009 spending.

      • http://www.corporatesnobs.com promotional products

        Ow my that's a huge numbers indeed and certainly this charts are near to accurate results. Great post Jason, you gave me another information.

        -Val

  • http://www.facebook.com/priit.kallas Priit Kallas

    What numbers are these in the table? Forrester estimates (in millions), millions of what? Billions maybe? What year? 2009?

  • http://www.facebook.com/amirkhan Amir Khan

    Another high quality post from Jason. Regarding social media, I really got disappointed, I guess companies consider social media a frivolous platform where people come only for “entertainment”. One can't find a serious buyer. Also, difficulties in measuring social media analytic, confusion in choosing right platforms etc are also hurdles in adopting social media. I would say there are so many issues with social media but indeed this is the one of the cheapest ways to grow businesses.

    • http://socialmediaexplorer.com JasonFalls

      True, Amir. And we'll continue to fight that challenge until companies
      begin to see measurable returns or increases is customer retention,
      etc., as a result. It's a matter of time and good measurement.

      • http://www.superiorpromotions.com/ Promotional Products

        Amir,

        These were my thoughts exactly… Jason, I appreciated this post, along with many of your others and thanks for the response to Amir's… I am going to pass this along, it always is good to know where the money is spent

  • http://www.facebook.com/amirkhan Amir Khan

    Another high quality post from Jason. Regarding social media, I really got disappointed, I guess companies consider social media a frivolous platform where people come only for “entertainment”. One can't find a serious buyer. Also, difficulties in measuring social media analytic, confusion in choosing right platforms etc are also hurdles in adopting social media. I would say there are so many issues with social media but indeed this is the one of the cheapest ways to grow businesses.

  • http://socialmediaexplorer.com JasonFalls

    The numbers are millions of dollars and 2009 spending.

  • http://socialmediaexplorer.com JasonFalls

    True, Amir. And we'll continue to fight that challenge until companies
    begin to see measurable returns or increases is customer retention,
    etc., as a result. It's a matter of time and good measurement.

  • Pingback: Is your business ready for search engine changes? | Social Media DJ

  • http://www.facebook.com/people/Bob-Hazlett/714246644 Bob Hazlett

    A couple of thoughts and questions

    Do you think display ads are simply used as awareness to generate and feed search? Seems like search gets a lot of the credit and glory, but something has drive the awareness to the user.

    Email, if done right (which it seldom is), is so powerful. How do you see focus shifting, if any, in the email department?

    Bob
    http://onehalfamazing.com

    • http://socialmediaexplorer.com JasonFalls

      I think some display ads are effective, but for the most part people
      ignore them. You can argue branding as a primary use for them, but the
      click-through rates on most are less than two percent, which is
      incredibly poor. I think traditional advertising and methods should be
      used to drive the traffic and interest in both digital and social
      properties for a brand. Display ads online can do that as well, but
      again, the ad has to be particularly engaging for it to be more than
      minimally effective in most cases.

      I think email is becoming more important by the day. Not only are
      companies getting better at using it appropriately for their
      consumers, but consumers are discovering those brands that are doing
      it right. I don't have stats to back that up yet, but I can see it
      happening.

      Thanks for the questions, Bob! Appreciate the input.

  • http://www.facebook.com/people/Bob-Hazlett/714246644 Bob Hazlett

    A couple of thoughts and questions

    Do you think display ads are simply used as awareness to generate and feed search? Seems like search gets a lot of the credit and glory, but something has drive the awareness to the user.

    Email, if done right (which it seldom is), is so powerful. How do you see focus shifting, if any, in the email department?

    Bob
    http://onehalfamazing.com

  • http://socialmediaexplorer.com JasonFalls

    I think some display ads are effective, but for the most part people
    ignore them. You can argue branding as a primary use for them, but the
    click-through rates on most are less than two percent, which is
    incredibly poor. I think traditional advertising and methods should be
    used to drive the traffic and interest in both digital and social
    properties for a brand. Display ads online can do that as well, but
    again, the ad has to be particularly engaging for it to be more than
    minimally effective in most cases.

    I think email is becoming more important by the day. Not only are
    companies getting better at using it appropriately for their
    consumers, but consumers are discovering those brands that are doing
    it right. I don't have stats to back that up yet, but I can see it
    happening.

    Thanks for the questions, Bob! Appreciate the input.

  • http://www.prova.fm/advertising/ Barbara

    what a great blog you have here. i believe that an email campaign may not be always successful for the sole reason that spamming is common. most people would rather mark an email as spam even if the title sounds legit or interesting. in my case, what really worked is email + Prova's help in online and offline advertising. i personally think i could not have survived the bad times if not for the combination of those two.

    • http://socialmediaexplorer.com JasonFalls

      Thanks Barbara.

  • http://www.corporatesnobs.com promotional products

    Ow my that's a huge numbers indeed and certainly this charts are near to accurate results. Great post Jason, you gave me another information.

    -Val

  • http://twitter.com/excelvou Excelvou

    the question is how effective social media can drive dollar to us ? :D