Thursday, October 4, 2007

IAB gets another notch on its bedpost

A version of this piece was published in Marketing in 2007

Every six months, new figures are released by the Internet Advertising Bureau, setting out the growth experienced in online adspend.  In what’s becoming a bit of a tradition, the IAB likes to point out which medium they’ve passed – last time it was national press, this time the notch on their bedpost is direct mail.

And as the powerpoint rolls by, there’s no doubt that TV is being lined up for notchdom somewhere around 2009.

At almost 15% of UK adspend, the UK gives the highest share to online of any market in the world, and growth has – incredibly – accelerated this time.

As each quarter builds on a larger quarter, the percentage rate of growth naturally slows.  2006 saw a 41.2% increase – the first half of 2007 has seen a 41.3% hike compared with the same period the year before.

Behind this was classified advertising which experienced a remarkable 72% surge, moving to take £1 in every £5 spent online, and search which grew 44% and now takes a 57% share of total online advertising. 

But whilst the strongest growth came from the more direct end of the business, there are signs that the internet is starting to be recognised as a powerful brand advertising medium. 

Traditionally, Finance and Travel – both intangible products that were ideally suited to online selling – have dominated web advertising.  But the Automotive category, which just three years ago languished as one of the smallest categories online, has just overtaken Finance and now accounts for 12.5% of total online spend.

This is important, because whilst few cars are actually sold directly online, it’s long been known that the internet plays an important influencing role in the purchasing process for cars.

Ten years ago I set up the website for a well-known car manufacturer, and like many marques, they wrestled with the channel conflict that the web potentially represented.  Dealers held the customer relationships and all the data relating to ownership, and they guarded it jealously.

To them, the web felt like a real threat.  Would manufacturers use it to go direct, centralising CRM and disintermediating the dealer? 

In the event, dealers were delighted – online sent them fewer Saturday tyre-kickers, and if anything their challenge was to be as well-informed about the product as the web-prepared consumer.

So websites quickly became an important component of automotive marketing, but advertising took much longer to establish itself.  That’s all changed now, and online brand advertising has become a core part of the car marketer’s toolkit.

This is encouraging for the online ad business, who for five years now have been trying to persuade FMCG advertisers of the ability of online to deliver brand messages.  If cars can make use of brand advertising online they argue, why not soap powder?

There’s no doubt the audience is there, and there’s no doubt the medium can be used to reach them.

But FMCG marketers remain unconvinced.  Whilst direct marketers have more accountability than ever, brand marketers are less supported.  Case studies abound into the brand impact that advertising online can bring, but what is lacking is an effective planning toolkit to implement these learnings.

The most fundamental of these tools is an accepted planning currency.  The industry has been moving forward on this, but progress is pitifully slow.

Many in online think that FMCG market are applying double standards, calling for greater accountability in online whilst continuing to invest in TV.  Online practitioners are unwilling as they see it to drag their levels of accountability down to those of traditional media.

But TV sets the standard by which other media are judged, and the online ad business really needs to get to grips with this.  The success of the automotive section should be the spur the industry needs to address this – if they want to add TV to their bedpost, a planning currency has got to be their first step.