Last week, I wrote a blog post about our annual local search study findings for 2009, conducted by TMPDM and its interactive division 15miles in partnership with comScore. This week, I report on the latest data from other analytics and market research firms. Their findings, which confirm what our local search study revealed, indicate that digital media usage — Internet search, online video and mobile — is on the rise. This is creating an upsurge in search marketing and a demand for digital agencies.

The Decline of Internet Display Advertising

Just when marketers began shifting their spending away from declining traditional channels such as print, online ad spending is starting to shift as well, proving that the search landscape is constantly changing. Marketers need to stay current with the latest consumer search behavior and media usage trends for their efforts to remain relevant and to resonate well with audiences. If you are marketing at a watering hole that has dried up, your consumers have migrated elsewhere, and your marketing is likely not reaching its true potential.

For example, consumers today are less engaged with banner ads, or Internet display advertising, than they were before Web 2.0. While display advertising still comprises a significant portion of online spending, the numbers continue to decline steadily. Truth is, consumers are so inundated by the abundance of online ads that they’re simply not swayed to click with the same frequency when online ads first started appearing. Today, consumers research brands online and look up local business information when specific needs arise, meaning they are less likely to engage in random banner or display ads.

Acccording to GroupM data, Internet display advertising has experienced a steady decline over the past several years due to a surplus of supply over demand. “In 2010, display spending is projected to have a smaller share of total digital spending [in the U.S.], with a 34 percent share, down from 35 percent in 2009 and 39 percent in 2006. Worldwide display advertising is expected to grow just [five] percent next year to about $20 billion.” Despite these numbers, digital media usage and spending overall will increase next year.

Increase in Digital Spending Overall

While Internet display advertising appears to be down in the U.S., GroupM reports that “digital [spending] is expected to climb [seven] percent next year to $24.4 billion, grabbing a 17 percent share of total spending, compared to 15.4 percent in 2009.” GroupM attributes this growth to the upswing in online search and video, “which compensates for declines in Internet display advertising and sponsorships.” Simultaneously, global Internet spending is expected to increase by 11 percent next year to $65 billion.

Based on these numbers, the search landscape is booming. But as we have reported all along, search is constantly changing. According to GroupM spokesperson Rob Norman, “Today, search remains a key driver of digital marketing as advertisers compete to capture a disproportionate share of the intention that search behavior represents… Search marketing is becoming ‘intention marketing’ and is moving beyond results pages to activating and responding to the social graph.” So the next question is, “If the search industry is flourishing (global search advertising may grow 12 percent to $25 billion in 2010), how are consumers searching?”

The Growth of Mobile

According to GroupM, mobile advertising will grow 19 percent next year to $3.3 billion. “In the U.S., the number of people accessing news on their mobile devices daily has more than doubled to 22 million and those accessing social networking sites have increased fourfold to [nine] million, compared to just a year ago.”

Based on additional data from Nielsen Business Media, usage of social networking sites is growing among smartphone users, demonstrating the growth of both social networking and mobile. “Social networking usage on smartphones has skyrocketed by 187 percent to 18.3 million unique users in July 2009,” nearly tripling the number of users (6.4 million) from the same time in 2008. Based on this report, social networking comprises 32 percent of all smartphone activity. What were the most frequented social sites among smartphone users? Facebook was most popular (14.7 million users), followed by MySpace (7.1 million) and Twitter (4.1 million).

Jon Stewart of Nielsen stated, “Social networking is probably the most important thing going on with mobile devices because the devices lend themselves to more social networking activities.” Stewart went on to explain that by being mobile and having access to the mobile Internet, users can report about their experiences on a real-time basis, rather than wait until they return home to use their desktop computers. Think about it: Twitter users are more likely to update their followers about real-life encounters as they happen outside the home than share content about the happenings inside the home.

Nielsen also reported the following findings among smartphone users:

• Engaged in text messaging: 60 percent.
• Conducted multimedia messaging: 31 percent.
• Used the mobile Internet: 25 percent.
• Downloaded audio, applications or games: 40 percent.
• Watched videos: seven percent.
• Growth of mobile search: 113 percent.

While “smartphones still only account for a relatively small percentage of the overall mobile subscriber base,” these mobile devices are growing in popularity and affordability, and consumers have more options in the smartphones they buy. As more consumers adopt smartphones, expect mobile Internet usage to increase and mobile marketing to follow suit.

Internet Usage Fueled by Video Viewing

As we reported in our annual local search study, online search traffic has remained relatively stable from 2008 to 2009. In a recent report on AdWeek.com, Internet usage overall is steady, although “more people are viewing [videos] online than ever before.” Adults ages 18–24 watch the most online video content at five hours per month; meanwhile, seniors 65 years old or more view just one of hour of online videos each month.

“Short-form videos such as YouTube clips still make up the lion’s share of online video viewing — 83 percent in May ’09 — while name-brand TV network content comprises the majority of mobile video viewing.” Video viewing on the mobile screen continues to increase just as overall mobile usage grows. In fact, approximately 15 million Americans indicated they watched mobile video during Q2 in 2009, an increase of 70 percent over 2008 results.