It’s no secret that the economic downturn affects everyone. Figuring out how is another matter altogether.

For the third time this year, eMarketer has lowered its online advertising spending estimates. Yet the company reports online spending on the whole will increase 8.9% over 2009 (in fact, eight key areas — search, display ads, video, rich media, classifieds, leads generation, sponsorships and email — are estimated to see increases in spending).

This would be great news — if it were true. I’m not sure what kind of rose-colored calculator eMarketer uses for its projections, but the numbers we’re seeing paint a far grimmer picture.

Pubmatic, an online ad optimization services, reported that 2008 Q4 CPMs were down a full 48% from the year before. At a time when you’d expect the numbers to rise with consumers toting around shopping bags full of holiday gifts, these lower numbers do not speak well for the year ahead. The company also reported that ad spending on entertainment sites plummeted 42% in the past year.

So what can we expect to see in 2009?

SEM spending will be flat. Why? Tightening budgets, lower CPCs and a decrease in a number of competitors due to bankruptcy. Compared to other demand generation vehicles, this cost-effective approach should weather the financial storm and provide marketers with the justifiable spending they seek. JP Morgan predicts search spending will increase 23.4% in 2009. We believe that number is very optimistic.

Display ad spending will fall sharply. Until someone develops a model that can deliver the rich, branded content of display ads at CPC prices of search ads, marketers should be wary of the high cost of banner ads. Springbox anticipates a large online ad network will change to a cost-per-click model in 2009 in order to generate new value from a rapidly declining asset.

Social media will offer new opportunities for customer engagement. As an alternative to display ads, social media spending may well increase. Marketers will incorporate these tools into their arsenal as a way to understand how consumers view their brands. Improved tracking of visitor engagement along the purchase path will enable marketers to quantify the value of their social networking efforts. The current financial climate is the perfect time for marketers to take stock of their marketing plans. Every line item — traditional or digital — should be working together to drive conversion and add brand value.

Thanks to Robert Raiford for contributing valuable insight to this article.

http://www.youtube.com/watch?v=k6aBITJuSQA

Has the democratization of analytics jumped the shark? Ask MC Hammer.

In this video (courtesy of Juice Analytics), the rapper/pastor/lifestyle entrepreneur discusses how analytics helps him make informed business decisions. The point? With so many tools now available to monitor site traffic and demand gen campaigns, businesses have no excuse for failing to leverage key metrics to optimize user experience and goal conversion.

At Springbox, we share MC Hammer’s enthusiasm for all things data (in fact, I’ve considered wearing parachute pants to the office on Fridays as a show of solidarity). Just remember: All the metrics in the world can’t help you if you don’t know what to look for.  

Please, Hammer, don’t hurt me.

Even in a downward spiraling economy, opportunities for ROI enhancement abound. One aspect to examine is how much you are paying for online demand generation. If your competitors have ceased operations or have merged with other competitors, having less competition for desired ad space and keywords could save a substantial amount of ad spend.

Consider the financial services and mortgage industries. Both have seen a rapid consolidation of companies this year. As a result, the number of aggregate players bidding on the same popular keyword is declining. With less competition in the market from all sides, the cost per click advertisers pay will start trending downward.

We are already beginning to see that occurring in financial search terms cost per click.

There is also opportunity for advertisers who were not previously able to compete for the most expensive placements. With overall costs coming down, it’s time to revaluate placement costs and the effect they have on campaign ROI. It may be time to move from a lower cost placement up to a premiere-level placement.

Alternatively, if you work at one of the companies that gets swallowed up by a competitor, now is the time to stop competing in ad buys with your new employer. Searching for the term “mortgage” on Google reveals paid results from Countrywide Mortgage and Bank of America. Since Bank of America acquired Countrywide Mortgage earlier this year, is there any reason why the two are driving up the cost of advertising on Google by competing with each other?

It’s easy to fret about the financial headlines of the day. You shouldn’t. Shrewd digital marketers will identify, seize and optimize the opportunities of the day.