Why interactive marketing will prosper in 2004

WM Circle Logo

By: Wise Marketer Staff |

Posted on December 29, 2003

Total marketing expenditure - including interactive marketing - across the top seven national markets will see a strong upturn in 2004, with a predicted growth of 3.4%, according to London Business School's 'Marketing Expenditure Trends' (MET) report, conducted in collaboration with the Paris-based global communications group, Havas.

In addition, there is evidence that the recent growth in interactive marketing is accelerating, and is likely to continue long-term. Total marketing expenditure for the seven countries taken together (UK, France, Germany, USA, Brazil, China, and Japan) is expected to show minimal growth in 2003 (1.1% in current local currencies) with stronger growth in 2004 (3.4%). The cutbacks in expenditure seen in recent years reflect short-term market and economic conditions. As conditions improve, marketing budgets will grow again, according to the report.

Strong growth
China shows very strong growth, followed by the USA and the UK. The recent dramatic growth in China is expected to continue as a result of its rapid economic development and its huge long-term market potential. Both Japan and France showed a small decline in 2003, followed by a flat expectation in Japan for 2004 and moderate growth in France. Germany displays minimal growth over the two-year period. Despite the fact that significant nominal growth is expected for Brazil in 2004, inflation may well account for much of this.

Interactive investments
Companies in all sectors are investing heavily in interactive marketing. Only Japan and France appear to be lagging somewhat in this area. Interactive marketing already accounts for 10% of total marketing expenditure in business-to-business (B2B) firms, and 6% in business-to-consumer (B2C) firms. Online promotions and incentives, and permission-based email, are areas of particularly fast growth. But firms are also investing to improve the sophistication of their web sites (e.g. password-protected extranets, search-engine optimisation, and online sales) and web advertising (such as sponsored search results or pay-per-click advertising).

For Western advertising and marketing services agencies, their limited exposure to the stagnant Japanese market is a benefit: excluding Japan adds approximately one percentage point to the projected growth of total marketing expenditure in both 2003 and 2004. However, the long-term trend toward direct marketing - especially interactive - poses a strategic challenge for these groups.