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Why Can't Performance Marketing Be Worth $40 Billion?

September 15, 2011 by Chris Trayhorn, Publisher of mThink Blue Book

People with bigger brains than my own are predicting that the online display ad market will grow from approximately $25 billion today, to more than $200 billion within the next few years. Almost all of that increase represents “new” online money, meaning that it will come from budgets that are currently focused on offline marketing channels and that will shift to online over time.

The question raised for performance marketers is, how much of that money might come our way?

If display is going to grow by a factor of eight or more, then why shouldn’t performance marketing do just as well, if not better?

More to the point: why shouldn’t performance marketing be a $40 billion sector?

There are two main arguments for a future display ad market of over $200 billion.

First, online is still really bad at monetizing all the attention that it actually gets from users. In comparison to an hour of TV-watching, an hour of Internet usage produces about one-third of the revenue. Why? Opinions differ, but my own feeling is that it comes back to the fact that for big brands with huge budgets, it is still much too hard to spend those budgets efficiently online. There’s too much fragmentation, too little brand protection and too much complexity. As those problems are addressed, we should see online attention priced much higher. And why shouldn’t online attention be priced the same as TV? If it was, it would mean a threefold increase in online revenues, with the display ad market rising to $75 billion.

But the the second driver for a massive increase in online display is even larger. It results from the gradual shift to an all-digital delivery mechanism for TV viewing. The TV ad market dwarfs what we see online at the moment. As TV moves online, the ad budgets will move with it. Once the cable and satellite companies have given up their oligopolies and everyone watches individually personalized TV channels over broadband Internet connections, then that’s another $150 billion worth of advertising budgets that will shift to digital simultaneously.

Put those two trends together and it is easy to predict a digital display market of anything up to $250 billion. There’s plenty of growth to come in online marketing.

But as so often, the really big money depends on how fast the major brands move their budgets. The fact that those budgets will move online eventually can not really be doubted. The only question for performance marketers is, are we ready to take advantage? If we get our house in order, fight fraud and brand dilution, consolidate the network space and push forward with personalization and analytics technologies, then why shouldn’t performance marketing take 5% of those new digital marketing budgets?

Or 10%?

Or even 20%? Imagine a performance marketing sector of $40 billion. Forty. Billion. Dollars.

Doesn’t that make it clear that we need to be cleaning up our act and developing relationships with the biggest brands right now? Major brands are where the money is and will continue to be.

Forty. Billion. Dollars.

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Filed Under: Revenue Tagged With: Advertising, Agencies, Industry Trends

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