The Dramatic Shift to Online Marketing and Advertising Continues

Interactive advertising marketing spend has been on a consistent upward projectory, year on year across the globe, winning massive share from traditional media. The dramatic rise of online consumption compounded by interactive advertising’s unique abilities around targeting and reporting has put online as a critical piece, if not at the heart, of the communications mix.  The outlook, despite tough economic conditions, indicates further media channel swtich as the core rational of the change described below is exacerbated by the advent of new services, channels and in particular the escalating rise of  dynamic internet video, both profesional and user generated.

The facts – Locally

The 2008 New Zealand IAB PWC Insight Report shows an incredible 43% growth in interactive adspend over 2007, up from $135.2m to $193.2m in 2008, confirming interactive as the fastest growing major medium in New Zealand. Key media channels (TV, newspaper, magazines, radio, outdoor) went backwards over the same time period according to the 2008 ASA report.

Advertisers are clearly recognizing locally interactive’s power to build brands as well as generate direct responses. Search and Directories lead the way growing 75% to $59.71m and represented 30.9% of all interactive spend, up from 25.3% in 2007. Within the total growth the share of display dropped from 44% to 39% in 2008, reflecting trends in other markets.

The facts – Globally

In the US online advertising is forecasted for 2008 to be over US$20bn. In the UK, the IAB PWC report shows that online advertising accounts for 2.1bn pounds in 2008 and is widely forecasted in 2009 to take top the spot from TV. Search represents 51% of the total online spend in the UK (predominately Google). Across Europe and the USA the trend is nearer 40%. No wonder that Google is the most highly valued online pure-play company despite the 2009 economic climate.

Why is Online Capturing the Advertising Dollar and Share of Mix.

With the dramatic change in media usage and online advertising’s ability to report, target and increasingly engage, the marketing landscape across the globe is in revolution. The consumption of media has changed. As broadband expands time spent online web increases. In key international markets internet users are watching 80 plus video content snippets per month. Locally Nielsen reports that the average kiwi spends 20 hours a week online, in high broadband locations such as Scandinavia and Israel this is over 30 hours. These are hours that used to be spent digesting directly other media. Advertising dollars have always followed the audience, and that is what is happening.

Henry Ford is often referenced as saying ‘I know half of my advertising works, I just don’t know which half’. Interactive advertising wins here, with its unique ability to target and measure to the point of real-time, from viewership to actions (forms and e-commerce purchases). This unique dynamic ability means that campaigns can be fully targeted, ensuring the right messages are in front of the right people within the right content or behavior mode. It does not stop there.

With dynamic tools and pro-activeness online advertising campaigns can be continually optimized and tested to deliver maximum effectiveness. The result of this is the ROI of online advertising consistently beats other media not only in the direct response area but increasingly research studies (see www.iab.org.nz ) are showing online can deliver terrific brand objectives results to. Many of the worlds’ largest advertisers have shifted significant marketing investment into online. At opposite ends of the spectrum General Motors (US) last year moved all newspaper spend to online, whilst Proctor and Gamble have moved significant traditional marketing spend into developing online communities and brands such as www.babycentre.com.

At the local SME level, Google and targeted online communities / directories are replacing and eradicating traditional media. No wonder that 1 in 2 local US newspapers closed their doors last year, many of whom have serviced their communities for over a century. How does a local newspaper, ‘chip paper tomorrow’ work for an advertiser’s investment, when now they can create video content, list and/or target their customers for the same investment and probably greater return for the entire year.

Summary

The evidence is clear and overwhelming. Advertisers and audiences are moving online at pace both locally and globally. Taking advantage of this change is critical to every business, more so given the current climate. No other medium can deliver the level targeting and accountability to advertiser objectives than interactive advertising. Are you smartly advertising online, or is your business coming to the end of the road.

Author : Lee Williams, former Chairperson of the New Zealand Interactive Advertising Bureau, who is now running start-ups focused on helping small medium businesses online such as the leading online provider of SME Video : www.silverlinemedia.tv.