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Many companies are slashing their marketing budgets and evaluating how marketing dollars are spent due to the tough economic times. Slashing budgets is a clear sign that “Lean and Mean” is the current theme for many businesses. On average most research suggests that (while growing) online advertising still only represents less than 10% of where marketing dollars are spent. Yet even online advertising budgets are getting scrutinized.  J.P. Morgan recently predicted a down turn in online spend specifically impacting display advertising as advertisers turn towards more performance based advertising. A recently released study by MarketingSherpa further supports this trend:

For advertisers who wish to get the best ROI for their online marketing dollar the focus tends to shift to display advertising and whether or not they should keep spending in that category. We all know that display advertising (eg banner ads on websites bought on CPM or cost per thousand impressions) is typically the hardest online advertising initiative to measure. Comparatively, CPA (cost per acquisition) campaigns can be directly tied to ROI. Therefore, when under pressure to justify every marketing dollar spent the inclination is to slash display advertising budgets and increase more accountable marketing channels such as affiliate marketing. At the surface this seems to make sense. However, if you take a holistic approach to looking at this situation you may find that display advertising plays an important role.

At NETexponent we have seen how display advertising can boost other online marketing efforts such as paid search and affiliate programs. We evaluate all marketing channels in order to get a holistic view of our clients’ online marketing effort. This outlook has shown us time and time again that spikes and dips in performance driven marketing channels such as search and affiliate can sometimes be directly related to display advertising efforts. When significant display advertising campaigns are running for clients we usually see a boost in traffic and conversions in other online marketing channels. Therefore, display advertising can play an important role even in ROI focused advertising efforts.

Measuring the impact of display advertising on other media channels and choosing the right allocation of marketing dollars is where the tricky part comes in to play. I am not advocating that all advertisers go out and boost display ad spending because it may not have the impact they want. It is true that even boosts in performance related to display could come at a price that is too high for advertisers. My main point is that companies should evaluate the impact display advertising has on other online campaigns and use that data to determine exactly how much spend to allocate to this channel in order to maximize online marketing ROI.