Marketsmith, Inc. - Marketsmith in the News

NEW YORK — The industry should expect search marketing to grow; consumers to spend more online; television advertising to change direction; and direct mail to become a low-volume, more premium medium.

Those are the predictions Eric Schmitt, principal analyst at Forrester Research, Cambridge, MA, told a packed crowd at yesterday's Direct Marketing Club of New York luncheon about DM's future.

Schmitt's first prediction was that search marketing would double to $11.5 billion by 2010.

"We think this medium is absolutely critical," he said. "What is happening is that consumers are changing their behavior. ... They are becoming more active shoppers. They are educating themselves about products in the marketplace, and search tools are helping them do that."

Prediction No. 2, Schmitt said, is that 13 percent of all U.S. consumer retail and travel dollars will be spent online in 2010. In 2010, 46 percent of all consumer dollars spent on travel will be spent online.

His third prediction was that "2007 will be a very, very bad year for television." Advertising will probably be up this year, he said, because "we still have elections and the Olympics. ... By 2007, by the time the upfront rolls around in May or June, there are going to be 17 million homes with [digital video recorders]," which let viewers skip commercials.

As a result, "we think the cost of television advertising is going to come down drastically, and we think we will continue to see what we are seeing now—people talking about [decreased] television advertising." Part of this prediction is that by 2015, television ad dollars "will flow to more interactive, measurable ... formats."

Schmitt also discussed traditional direct mail. He said direct mail is still a growing medium but that it faces pressures: e-mail cannibalization, search engine cannibalization on the acquisition marketing side and rising postage and fuel rates. That's why he thinks mail will transform into a premium medium.

Schmitt's fifth prediction was that traditional ad agencies will get "a big-time demotion over the next five years as marketing services agencies replace Madison Avenue agencies." Driving this trend, he said, is the need for customer analytics.

"It will be the folks that understand customer data [and] how to use it...that will be the most successful."

Reprinted with permission from DM News.