Generate UK – Digital Marketing Blog

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There has been some interesting predictions this week, most notably from industry voice E-consultancy who have predicted that the expenditure in search engine marketing is likely to be nearly £2.8 billion by the end of the current year, an increase of around 25% year on year. That’s a fairly healthy growth prediction, especially if you believe the doom and gloom about the economic outlook.

So why are the well respected E-consultancy group predicting this rise? To start with, we are in the middle of an upwards curve when it comes to online spend. The growth has been evident for a number of years and will more than likely continue so for the next few years before finding a nice level.

The growth in online spend has not been without casualties, above the line advertising has been steadily slowing, in fact it is predicted that online spend will overtake television advertising spend in the next few years.. If a business has not had their marketing budget reduced, then they are most likely having conversations about where the best place to put their marketing pounds might be. This means we are getting closer to the real reason why E-consultancy are absolutely correct.

Businesses are making decisions to put more of their budget into online marketing strategies. The business decision is the fact that they can quickly measure a return on investment. They can quickly see the results of their campaigns and they know they have more chance of reaching their targeted audience who have money to spend. Altogether they have a more potent marketing weapon.

So it is a pretty safe bet that online advertising spend will continue to grow for the next few years. Although, we do think that the market will become more competitive. Traditionally agencies will extend their digital capabilities, design companies will introduce new services, which should lead to some consolidation in the market.

As competition grows, the agency fees will start to be eroded. This is an interesting debate that is waiting to happen. What parts of online advertising services can be commoditised? I’ve already seen companies offering email marketing and SEO type solutions for incredibly low fees. Is this good for the market or does it confuse our customers?

In summary, search engine marketing is in a very healthy position. There will almost certainly be more competition for each customer and that should should be welcomed. However, for the time being; measurable marketing and performance management seem to be winning out, this is why online marketing will continue with steady growth. It is the agencies who need to watch out for the recession, especially those who are not innovating and helping their clients to deliver winning campaigns.