28 Apr 2010

Online Advertising in Economic Development

Mr. Monzon co-founded GIS Planning Inc., one of the fastest-growing 5,000 private companies in the United States, according to Inc Magazine. As developer of the first GIS-based website for economic development, Mr. Monzon is an entrepreneur, innovator and technology professional. With over 15 years of experience developing location-based applications and GIS based websites, he has received multiple awards in both the field of Economic Development and Geographic Information Systems. His work has appeared in The Wall Street Journal, CNN, NBC News, and numerous GIS-related publications. Mr. Monzon has lectured about Internet GIS in Europe, the United States, and Latin America. Prior to GIS Planning, Mr. Monzon worked for Vectiv, an online GIS site selection company focused on the retail industry.

In our 2008 book, Economic Development Marketing: Present and Future, we discovered that only 1% of economic development marketing budgets are allocated toward online advertising, and only 13% of respondents identified it as an effective strategy. Furthermore, more economic developers reported cutting budget allocations for online advertising than raising them in the past five years.

Quarterly Revenue ComparisonsThis is dramatically different from the trends occurring in the larger US market of companies. North American firms budget 10% of their marketing budgets to online advertising, roughly five times what economic development organizations spend. Figure 2-2 maps the growth of online advertising revenues in the past eight years. Even after the dot-com bust at the end of 2000, the much publicized decline in Internet advertising was actually only a small dip. By the end of 2003, Internet advertising had surpassed its peak from the dot-com hey-day. Since the lowest quarter of spending during the dip of 2002, online advertising has grown over 400%. A study by IDC forecasts that from 2008 to 2012, Internet advertising is projected to grow at eight times the rate of advertising generally, doubling from $25.5 billion in 2007 to $51.1 billion in 2012. By 2012, it is expected to surpass newspapers and television (broadcast and cable) in terms of revenue.19 Online advertising is growing because it works. Top level executives, according to Invesp Consulting, agree that online advertising provides the highest return on investment.

Perhaps economic development marketing is uniquely unaffected by online advertising, but it is more likely that economic developers are lagging behind a strong advertising movement. In a discussion that came out of a recent training at the Southern Economic Development Council, many participants were confused and inquisitive as to why economic developers are not investing in online advertising at the same rate as organizations were investing in their websites. When asked about their own behavior, however, it was discovered that only a few in the room used Google AdWords, the most popular online keyword pay-per-click advertising tool. One of the key reasons explained as to why they were not using this service was because they didn’t know how to use it. Online advertising presents an opportunity for economic developers to invest in a growing marketing trend not recognized or used by many competing economic development organizations.


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