Nothing man has thought about grows or sinks forever. With that in mind, the first signs that digital ad spending growth is beginning to flatten have become plain. The first ad categories shaken out of legacy media more than a decade ago – recruitment and real estate – are no longer showing the double- or triple-digit growth of earlier years. Real estate, for example, may well have reached its online ad spending zenith by next year. After that, growth will simply be a matter of overall industry economics instead of a headlong rush to the Web.
Recruitment advertising was the first major ad category disrupted from print to digital. Spending growth for job postings has mediated for several years. Much of this has to do with the economy, but marketing efforts are steadily moving from advertising to internalized efforts at many companies. “Internal staffing,” to use human resources jargonese, has become a primary recruitment tool for large and mid-sized employers.
The same is true of real estate. Agents, many of whom don’t believe advertising sells houses in the first place, have turned to their own digital resources. Like many other small business owners, agents don’t clearly differentiate between spending on their own websites and advertising on others’. Where ad-spending increases are seen, they tend to affect national platforms like Zillow or Trulia, not local sites.
The era of wild growth for digital advertising is relatively short compared with the century-old era of wild advertising expansion. It’s related, in fact. Our Golden Age of Advertising is rapidly coming to a close as classic advertising fades from the forefront of marketing, replaced by internally generated initiatives ineffectively labeled as “promotions” up to now. These initiatives have made up more than half of every marketing dollar spent for more than a decade, but at the local level they didn’t pass that 50% threshold until 2007. They were always tactical, not strategic; workaday, not glamorous. Which sold more dish soap last year in your market, distributed coupons or a national ad campaign?
Promotions have taken to digital marketing like a duck to water, and they’re growing far faster than digital ad spending – especially in the mobile and social spaces. Within five years, digital marketing will be evenly divided between advertising and “non-ad” marketing. Farther out, advertising looks to be eclipsed altogether. This is bad news for the big Madison Avenue agencies, most of which have yet to secure a firm understanding of the digital behemoth. As branding leaves traditional broadcast media for the mobile/social space, they will be less and less needed – by their current customers or the new giants that replace them.
Beyond this horizon lies the real heart of marketing: the services spending that comprises three-quarters the pie. Digital advertising and promotions are small beer compared to the $400 billion spent last year to support them. In the old, pre-digital days of the 20th Century, these expenses were hard to group and catalogue. Now, they are the frontier where the fastest growing and most promising digital companies work.
So the disruption continues, every day. The original wave may have crested, but more follow.