Is Calacanis’ optimism about online marketing justified?

Written on 28th October 2008                                                                                                              4 COMMENTS
Ernst-Jan Pfauth, editor in chief

Jason Calacanis predicted in his last night’s newsletter that online advertising spending would go up. After a rather depressing forecast, which included terms like “the Death Spiral of the American Economy” and “The Group Belt Tightening”, Calacanis comes up with the good news. This consists of four parts. Firstly, experience becomes more important than expenses. Good news for Digg, StumbleUpon, and other discovery services. Moreover, there’s no competition (2) for bootstrapping start-ups (3). Lastly, a measurable advertising boom will occur:

Advertisers will start cutting print, outdoor, TV, and radio (probably in that order) in favor of the internet’s action-based offerings such as CPA (cost per acquisition), CPL (cost per lead), and CPC (cost per click).

Jason Calacanis

Although Calacanis is talking about the US, his prediction can be projected on different parts of the world. It won’t be surprising to see it happen in Europe as well – as it makes sense to cut marketing costs and look for attractive alternatives. In Russia this trend is already visible.

Online advertising boom in Russia

Sfnblog reports that online marketing communications in Russia have experienced a surge in financial backing since the beginning of this year. Total marketing numbers for 2008 will average between $1.04 billion and $1.48 billion, says market analysis firm Tagline at the annual Russian Internet Week. They based their findings on a study of 600 companies.

In the UK they’re still waiting

However, in others parts of Europe, the online marketing industry has been noticing a decline in advertising spending. Patrick Smith from Paidcontent UK reports:

IPA’s recent Bellwether report showed that online ad spend in Britain was flat in Q308 and Enders cut its 2008 forecast from £3.56 billion [€4.44 billion] to £3.33 billion [€4.16 billion], despite most in the industry predicting – or at least hoping – that online ad spend would weather a downturn and continue to grow.

Of course I hope we can look back in a few months and say Calacanis was right – that most online markets did follow the Russian pattern. It would further professionalize the blogosphere, including this blog.