The Big Story is not the $5 Billion part…

Interactive Advertising Revenues surpass $5 Billion in Q2 2007. Yes – it’s a huge story (see IAB press release here), and yes, it’s 25+% growth over last year, but I really don’t think anyone is surprised by the fact interactive advertising is continuing to grow. We at Media Two Interactive have been saying this for years: “Interactive is an important part of the overall marketing mix”. We actually took that statement one step further about 5 years ago by saying we thought interactive would be the marketing mix leader that all other mediums would test out first before rolling out full campaigns (let’s face it – it’s cheaper, faster and easier to track – so why wouldn’t you?).

I believe that the rest of the (agency) world has finally caught up and is no longer looking at interactive as something that’s going to steal budgets from traditional; rather it is just another medium to deliver their marketing message on.

What I do believe is more of a story from the IAB is where that growth is actually coming from…

If you look at their breakout of dollars, 41% is coming from search while 32% is coming from display ads… Again, nothing surprising there – but then look at the pricing models. CPM buys dropped 3% while performance based deals increased 3% - a huge 6% swing in buying styles. This tells me that not only have large advertisers/agencies improved their outlook on interactive, but they’ve improved their technologies and reporting capabilities – and they are becoming more Direct Response driven!

This is music to our ears! Even when clients come to us for the first time, we talk about accountability and ROI and a lot of times that goes right over their heads… This swing in pricing models tells me that the interactive education is over – and now it’s time for the best performing advertisers and agencies to step forward and show case their capabilities. This to me – is 5 billion times more exciting than hearing that interactive ad spend is catching up to traditional.