As regular readers know, I have been predicting that online revenues for advertising, ecommerce and subscriptions will continue to grow during a recession.

The reason is simply because everything online is highly measurable and distribution of anything digital is almost free. In tough times individuals and companies are far more careful how they spend their money and the internet supports being frugal.

The latest figures for UK online ad spend support my predictions.

In the first six months of the year online ad spending rose 21 percent, reaching £1.68 billion ($3 billion). During the same period the country’s total ad market fell 0.7 percent.

Online ad spend won’t be immune as the recession worsens, simply because there will be fewer companies to advertise. However, I expect spending to continue growing and will probably hit £3.2 billion by the end of the year.

The casualties will be print, outdoor poster, radio and TV advertising.

Three Future Online Advertising Trends

I predict:

  • Trend #1 - An accelerated shift from simple advertising, to ads that are paid on results. This is usually known as affiliate or cost-per-action advertising or marketing. This means that publishers displaying the ads will only get paid if the website visitor clicks on an ad AND takes action on the site they visit. The action usually consists of buying something, but can also be signing up to an email newsletter, completing a survey or downloading a bit of software. The income from each completed action will vary, but it will be significantly higher than just an ad click.

  • Trend #2 - Advertising will move to specialist websites. As advertisers scrutinise the effectiveness of their online spend they will start to move spend to websites that attract relevant audiences. This will mean spend will shift from the big generalist portals like AOL, Yahoo and MSN to niche publications.

  • Trend #3 -  Niche publications will start to cluster into subject groups to make themselves more attractive to big advertisers. There are already companies that do this like Adify and Gorilla Nation, and clusters of blogs like Federated Media and b5media.

Why should you care?

The beauty of the Internet is you can continually adjust your business to follow the money. Right now the money is going into advertising. Gradually it will shift more into affiliate marketing.

Take the time to understand how online advertising and affiliate marketing works and you will stay ahead of the mainstream and be ready to reap the rewards. It does not matter if you are currently running a membership or ecommerce site; there are always ways you can extend your business to attract additional income.

It is also a good time to look around for sites that are complimentarty to yours and approach the publishers to see if they want to work together. Co-operation could include jointly selling ad space, cross-selling your services, bundled pricing for both sites, etc.

Its time to be proactive and creative to stay ahead of the market.