This entry is a bit long - but worth the time.

While this report is completely supportive to Digital Marketing - and confirms much of what we've been writing about - it is silent on the broader context - that of the Networked Society.

All forecasts for the growth and adoption of digital technologies would be enhanced by using Gordon Moore's Law that states that component density doubles every 18 months. When time is expressed in "Moores Law Cycles" you can clearly understand why these technologies are moving so fast. For instance a Pentium 4 has about 40 million components. Over the next nine years we are likely to see 6 Moore's cycles - or component doublings. If this takes place the progression would look like:

40 to 80 = 1 Moore's cycle
80 to 160 = 2
160 to 320 = 3
320 to 640 = 4
640 to 1024 = 5
1024 to 2048 = 6

What Moor's Law indicates is that by the end of the nine years, the 6th generation Pentium - measuring from today's 40 million component chip - would become a 2048 million component chip. (There are big "if's" about the feasibility of continuing this progression however every time detractors have voiced their doubts, Intel has stepped up to the issues and blown the nay-sayers away. Can this continue? The only way to find out is to stay tuned in.)

So how does this relate to the Networked Society? While Moore's Law shows us how much computational power each doubling produces it suggests another by-product of the law. Chips come close to halving in cost at each doubling.

So while your digital hand held, network access device grows impressive capabilities, it is also getting cheaper by leaps and bounds. We estimate that by the end of those 6 Moore's cycles, 40% of the worlds population will be able to afford to belong to the Networked Society - over 2.5 billion people.

This is the "giant engine of change" that virtually guarantees the success and growth of the Networked Society.

ed. Terry and Lisa Wellman

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Online Advertising Steps Aside for Digital Marketing

By Michael Pastore | January 25, 2001

By 2005, traditional US companies will spend $63 billion annually on digital marketing -- multifaceted marketing campaigns that integrate online advertising, promotions, and e-mail strategies, Forrester Research found, but that doesn't mean the end of the road for Internet-only campaigns.

Decreasing dot-com spending will only temporarily pause online marketing's growth. Online advertising alone will rise to $42 billion worldwide by 2005, according to Forrester's report "Online Advertising Eclipsed."

"Online advertising's current swoon won't last," said Jim Nail, senior analyst at Forrester. "The dot-com tide has begun to ebb -- while dot-coms accounted for 69 percent of digital marketing in 2000, by 2005, traditional advertisers will embrace it, driving 84 percent of digital marketing. But the recovery won't begin until marketers master integrated digital marketing techniques."

As traditional advertisers learn that online advertising is just the first stage of a campaign, they will augment budgets for later-cycle activities like promotions and e-mail, the report found, boosting US digital marketing from $11 billion in 2000 to $63 billion in 2005 -- when it will represent 12 percent of all marketing dollars. Luring customers along the marketing cycle with targeted offers will propel the growth of promotions 42 percent annually, and more than $6 billion will be spent on e-mail marketing in 2005.

Forrester found that traditional offline advertisers will embrace digital marketing in three waves.

* The early movers -- companies that started advertising online before 1999 and include sellers of highly considered products or services like autos and financial services -- accounted for 16 percent of offline marketing in 2000. But because they plan to shift 25 percent of the overall marketing budget online over the next five years, they will represent 32 percent of all digital marketing spending by 2005.
* Mainstream advertisers -- companies such as Daimler Chrysler -- have hung back and waited to see how the market develops. As their early-adopting competitors increase their spending, these companies will begin to market online in 2002. Because this group will be slow to the market, they will spend only 10 percent of their marketing budgets online. However, 10 percent of their hefty marketing budgets will still account for 41 percent of all digital marketing by 2005.
* Manufactures of low-consideration products, such as soft drinks and household cleaners, began dabbling online in 2000 and will start to take the Net more seriously in 2002. Because their online budgets represent a lower percentage of the total marketing budget, this group will account for only 11 percent of digital marketing in 2005.
As has been the case with most Internet markets, the rest of the world will not see digital marketing eclipse online advertising for another 18 months. While regions outside of North America represented only 16 percent of overall online advertising in 2000, that number will grow to 27 percent of the $42 billion worldwide online advertising market in 2005.

Online advertising in Europe will grow nine fold to $6 billion by 2005, Forrester found, led by consumer e-commerce initiatives, which will drive the European online ad market from 8.5 billion Euros to 174 billion Euros in 2005. High access charges, lower technology adoption rates, and lower overall per capita ad spending will to stem the growth of online advertising when compared with the US, according to the report.

Online ad spending in the Asia-Pacific region will rise to $4.5 billion in 2005 -- while Japan and Australia continue to power 80 percent of the region's advertising market. But increasing technology penetration in countries with healthy traditional advertising markets will fuel the region's growth.

In 2000, Latin America was frenzied with a flood of foreign investment, the spread of free ISPs, and the emergence of dot-com entrepreneurs, which set off a temporary Internet boom. However, despite the dot-com meltdown, online ad spending in Latin America will continue to grow to $1.2 billion by 2005.

Forrester surveyed 59 marketers for its report and found that online marketing per company will rise from $550,000 this year to $1 million in 2003.

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