With an increased focus over the past few months, we as an industry have been concerned with getting the most with limited budgets and maximizing what we can offer our customers and partners for their the same or lower dollars than available in the past. Basically, strategizing ways to weather the current economic storm. Interestingly, in a new take on the recession, the IAB commissioned a groundbreaking study to examine how our industry is actually benefitting the U.S. economy reflecting how the ad-supported Internet has a positive impact regarding revenues and job creation. According to the report, interactive advertising is responsible for $300 billion of economic activity in the U.S. and a total of 3.1 million Americans are employed by our interactive ecosystem.
The study examines this impact with a broad scope, addressing improvements in productivity, research and social infrastructure, as well as business innovation and even reduction in environmental waste. Taking it one step forward, from an interactive marketing standpoint, it seems that targeting can be seen as playing a significant role in this positive impact on the economy.
How does targeting benefit our economy? Given that there is the necessity for ad supported content, it follows that consumers benefit from that advertising being relevant. Relevancy drives engagement and results. Results drive value for advertisers – they can realize their ROI at higher rates with targeted advertising. Higher rates from advertisers means higher payouts to content publishers. Content publishers get the monetary support they need to continue providing free content while improving the visitors overall experience on their site. Better experience, return visits, etc.
Better results for advertisers means more demand in the market. More demand drives economic value. And that benefit doesn’t just apply to ad revenues; it also extends to ecommerce, branding and even offline sales. Targeted advertising has been shown to cut advertising costs and drive sales, which applies to brands selling products and services online as well as providing branding benefits to offline sellers. The report notes that “Advertisers and their agencies have recently found that the more precisely they can target messages to potential buyers likely to be interested in those messages, the more productive Internet advertising can be.”
The rest is snowball effect; the better all these companies do, the more people they employ, the more those employees can afford to make purchases, and the better the overall health of the economy will be. That’s simplifying what is an unbelievably complex system, but it does illustrate the fact that targeting has been undeniably beneficial to the growth of online advertising from a revenue standpoint, and by extension, that industry’s contribution to the U.S. economy as a whole.
The IAB report is not a short or easy read, but it is a fascinating one. To view it, visit: http://www.iab.net/economicvalue