The last few years have seen an exponential increase in Internet marketing. Even smaller businesses today realise the true potential of internet marketing.

Following are some factors that have contributed to the exponential growth of internet marketing in recent years:

Volatile Economic Conditions

The volatile economic conditions of today have forced businesses to rethink their strategy and reduce business costs. Most businesses have had to reduce operating costs in order to remain competitive and profitable under tough and unpredictable economic conditions.

Lower working capital has forced companies to look for more effective ways to market their products and reach out to customers. While larger companies have seen huge reductions in marketing budgets, smaller companies are more cautious of spending on marketing and promotional activities. With relatively lower costs and vast reach, marketing on the Internet has never been more attractive for businesses than today.

Shift from Traditional Advertising to Internet Marketing

The last few years have seen a shift from traditional marketing methods towards advertising on the internet. Leading newspapers, magazines and other publications have seen a fall in demand while online publications and portals have benefited from increasing advertising demand.

The following chart highlights quarterly ad spend by businesses since 1999; dollar figures are rounded. (source: iab.net). Similar trend exists throughout the world.

A recent story in the Guardian Newspaper has reported that online advertisers are continuing to spend more in spite of poor overall sales. This is a further testament to the shift in advertising practices by businesses.

Search engines such as Google and Yahoo have seen one of the largest increase in demand over the last few years.

Continued Growth in Search Traffic

Businesses, small and large, have been quick to adapt to the year on year growth in search traffic. This has also been responsible for the growth in Internet marketing.

In total, comScore estimates that Internet users now conduct over 200 billion searches per year. Stats for UK alone show that in December 2011, which was the busiest month ever for UK search traffic, there were 2.3 billion visits to search engines in a single month.

Rise of Social Media

Social media has transformed the way businesses and consumers interact with each others. Studies have found that social media has the potential to impact over 90% of all online transactions.

Social media presents businesses with an ever increasing opportunity to reach out to a large customer bases that would have been previously unimaginable. It is thus hardly surprising that a recent study by Comscore has found that in 2012 in the UK, Facebook.com carried even more display ad impressions than all Google properties combined.

According to marketing analysts, increased competition by businesses on the internet may cause growth to slow a little in the future. However in spite of this total spending on online advertising spend is still expected to increase manifold over the coming years.

Rise in Internet Penetration

There are over billion internet users in the world today. Take a look below at the phenomenal Internet penetration rates globally. This offers an ever-increasing reach for businesses that use Internet Marketing to reach out to their market.

Changes in Consumer Behaviour

E-Commerce sales are growing faster than traditional high street sales in many countries.  According to Forrester, E-Commerce sales, which currently make up nearly 10% of total retail sales, is set to reach nearly $300 Billion in U.S by 2015.

Forrester have also stated that in Europe, online sales grew by 18% in 2010 compared to 2009, and 13% in 2011. The number of online buyers in Europe is expected to grow from 157 million to 205 million by 2015.

Growth of Video Advertising

The growth of Video on the internet has been an instrumental factor in the growth of online advertising. Both, the use of videos and online video advertising are one of the fastest growing marketing channels on the Internet. Experts predict that Video ad spend will see double-digit growth in 2012.

Videos allow businesses to deliver a level of interactivity that was previously unimaginable.  Online videos allow businesses to deliver innovative TV style advertising at a much lower cost.

Growth of Mobile Advertising

According to Google SEO Eric Schmidt, Mobile is Growing “Faster Than All Of Our Predictions”.  According to a recent comScore study, mobile devices accounted for approximately 10 percent of internet traffic during 2011.

Cisco also projects that mobile connections will hit 10 billion by 2016. The Cisco forecast shows an 18-Fold Growth in Global Mobile Internet Data Traffic From 2011 to 2016.

The rise in mobile internet usage offers a new advertising channel to reach out to customers.

Mobile advertising in the form of text messages and more recently SMS have already been in existence for quite some time. However new areas such as videos, interactive banners and mobile search advertising are changing the face of online advertising by providing new opportunities to offer innovative and enriching user experiences.