It is my belief that all business will take a hit over the next 2 years, but it is in this time that the internet has a unique advantage to accelerate its already predicted growth to take a bigger chunk of market share from traditional business. My top 10 reasons:

1. Gas: ecommerce companies offering free shipping married to people who don’t want to use their precious gas will drive more online sales.
2. Price Comparisons: People are going to take advantage of the ease of use of comparing 50 stores online in minutes versus taking a weekend driving around the city.
3. Advertising Efficiency: Although there will always be a huge place for traditional advertising, with online advertising and a good analytics program, you can see exactly where every dollar goes. This is much more attractive to businesses in a down economy.
4. Less Big Brand Advertisers: Big advertisers will start cutting budgets, leaving plenty of open ad space for a flurry of little guys to come online. Its the little businesses that make up the internet, bring them on!
5. Previous Brand Reluctance: believe it or not, there were many manufacturers that were reluctant to let retailers sell their product online. I would imagine this restriction will dissolve as they are scrambling to find anyway to sell their products. If more retailers can sell more unique brands online, more buyers will come.
6. TV Shows: As brands slow ad spending dollars in the TV DVR world, Television shows will start to become more aggressive in showing their shows online, which opens up all sorts of online ad dollars. Online TV is protected from DVR’s as the site can decide to put controls on. More people watching shows equals more money for ads on those shows.
7. Investment Dollars: As more people go online, more money is made online. As more money is made online, more investment dollars will be thrown at it. The more investment dollars thrown online, the bigger online businesses get. The bigger they get….ah, you know where this is going…
8. Lower overhead: most online retailers’ overhead is significantly lower than traditional brick and mortar retailers. Because of this, prices are lower. If prices are lower, people can buy more things, and spread their dollars over a couple of businesses versus just one. Consumers saving money is a great way for them to spend more. Not only does this point help online, it helps the economy as a whole.
9. Less Taxes: Currently, if you purchase outside your own state, you save your state sales tax. In my case, this is 7.75%. That is a huge savings and enough of a reason for me to go online versus offline. In poor economic times, people will look for anything to save upwards of 7%.
10. Virtual Services: With people wanting to find the best prices on services, they are more likely to find more boutique service with lower overhead online and use that service virtually, versus in person. This will save them a lot of money and get the same talented person. (lawyers, accountants, consultants).

A recent post on TechCrunch gives great information on how well Search engine marketing is doing compared to other advertising methods:

“According to eMarketer, search ad spending will reach $10.4 billion this year, more than twice as much as advertisers will spend on display ads. More importantly for Google, search ads will represent 42 percent of all advertising spending, while display ads will account for just 21 percent of all online advertising.” -TechCrunch

You can read the full story here

Internet marketing stats 2007/2008. The Internet marketing industry is still gaining great momentum:

1. A statistic recently put together by Comcast says it all. In 2008, it is predicted that only 7% of companies’ ad spending will end up online. This is eye-opening, as the same report shows that 17% of consumer’s ad consumption time is done online.  (Comcast, 2008)

2. Online Retail sales will rise 17% to 204 billion this year (Forrester Research, 2008)

3. $400 Billion of offline sales where the result of an online search, proving that online is an equal driver of offline as it is online. (Forrester Research, 2008)

4. 25% of the fortune 100 will create online communities to increase engagement with their customers (Forrester Research, 2008)

5. the US Internet is anticipated to capture $61.98 billion and become the top ad medium in 2011. (Veronis Suhler Stevenson 2007)

I am getting hammered by everyone (employees, clients, investors, mom) on what I believe the impact our current recession (including peoples’ paychecks and efforts for raises) will have on our market. I get asked not only for the effects in general or in internet marketing, but an overall effect on the online economy. It is hard enough to have to admit to the recession, let alone get bombarded by people about it.

*Disclaimer: I am known to be a fatalistic optimist, so please take my words how you wish.

In the long run, the recession should have an overall positive impact for many, because more people will be throwing more dollars online. Of the yearly $240 billion currently being spent on advertising, only 7% is online. In contrast to this, people spend 17% of their advertising consumption online. The most important advantage of marketing online versus offline is the ability to enter into short term relationships and see enough data to move and adjust a campaign, without having to pay for lunch (and you can skip the dinner invite) . To market offline, you typically have to plan months in advance and commit to a campaign (TV/PRINT/RADIO) for multi-month or even year terms. Your data will come in every couple of months, and other than seeing spikes in sales, it is hard measure what is and is not working. This doesn’t seem to fly in the technologically advanced world we live in now. And if you are still sharing your internet connection with your phone line- why are you reading this? When you spend your money online, you can see exactly what each dollar is doing and if you see problems in your campaign, you can change and adjust it whenever you want. You can also enter into short term contracts (sometimes as little as a month at a time) to experiment.

Because of the obvious efficiencies in online advertising as compared to offline, I believe more of the dollars being spent will move online. The overall advertising dollar pool may soften a bit, but online has such a small portion of it that we can only expect to see more money. I don’t think the question is whether or not online continues to grow (again phone/internet sharers, this is beyond your reach) as much as it is at what rate it is growing. Furthermore, the recession may actually accelerate the industry’s overall share of marketing dollars.

But Ay, there’s the rub; one area that the internet could see problems, is with investment dollars being thrown at us (we aren’t strippers here). Aside from Google and a couple of other real successes, the internet has not exactly been the safest play for investors. Sure, there have been some huge IPO’s for investors in the past, but most of those companies that paid huge dollars to investors were very artificial (and most have closed their doors). If you are one of those companies that relies on investment to sustain growth, you had better have one hell of a plan B, as the private equity market is inevitably going to dry up.

You all asked for it, and I believe that the internet will have a similar effect for online commerce as it does offline. I am partners in many online commerce stores and we can already see a bit of a negative effect in higher-end “luxury” items. Commerce will soften in general and will certainly appear online. We could get a nice new breed of people looking for better deals, and everyone knows (now) that the internet is by far the most efficient place to do that.

Those are my thoughts…buckle down, save money, and most importantly, make a very strict plan to be able to turn your company profitable by the end of the year.

I am very proud today. My company, eVisibility, has made the San Diego Business Journal’s “Book of Lists” and is ranked 7th largest ad agency in San Diego. Companies need to submit their audited financials to be on the lists, and looks like our growth has shot us into the top 10! From the looks of it, I cannot see why we would not be #1 or #2 for 2007 figures…watch out world.