Online Advertising Bucks Flagging Market
The industry received a welcome boost this week with the news that Internet advertising revenues rose significantly in the first half of 2008, despite tough economic conditions. NMK quizzed the industry on what we can expect for the next year.
Statistics from the Interactive Advertising Bureau (IAB) reveal another record First-Half for internet advertising revenues, up 15.2 per cent on the corresponding period in 2007. A total of $11.5bn (£6.5bn) was spent in the first half of 2008. However, while the second quarter of 2008 was up 12.8 per cent over the same period of 2007 it showed a slight decline of 0.3 per cent from the first quarter of this year.
Randall Rothenberg, president and CEO of the IAB, said that marketing managers were continuing to invest in digital media advertising because it “delivers a level of accountability unmatched by any other advertising medium.”
Search revenues reached almost $5.1 billion (£2.92bn) for the first six months of 2008, up 24 per cent from the same period in 2007. Display-related advertising – such as display banner ads, rich media, sponsorship and digital video - showed a 19 per cent increase on the first half of 2007.
Internet Ads Credit-Crunched?
With the credit crunch widely tipped to put the kibosh on advertising spend in 2009, once campaigns in the run up to Christmas are finished, what are the prospects for the industry beyond this quarter?
Chris Autry, CEO of online advertising firm Tailgate Technologies, sees the first half of next year as pivotal not just for the advertising industry, but also for marketing departments in general.
“The predicted squeeze on ad spend will almost certainly manifest in the early part of 2009, which will force brands and agencies to look carefully at how they can prove the value of their marketing strategies,” he told NMK. “2009 will be characterised by a need to prove genuine ROI against advertising spend and will, in effect, make marketing departments a cost centre responsible for driving revenue. Now more than ever, marketers will be forced to justify their marketing spend.”
Despite the gloom surrounding print and broadcast advertising revenues, the Web looks set to ride the storm. The European Interactive Advertising Association (EIAA) recently found that four out of five advertisers (81 per cent) say their allocated online spend has grown this year and will continue to do so over the next two years, up by an average of 16 per cent in 2009 and 17 per cent in 2010.
The vast majority (82 per cent) of advertisers quizzed by the EIAA who have seen an increase in their online spend admitted it is coming directly from the likes of print media (40 per cent), TV (39 per cent) and direct marketing (32 per cent) budgets.
As Tailgate’s Autry put it: “The World Wide Web has developed into an application-rich environment over the past 15 years, so why should brand owners continue to rely on the same benign advertising technologies that they did in the 1990s? Only when the world of advertising catches up with the rest of the Web - by providing consumers with useful applications instead of annoying ads - will we truly be able to measure the effectiveness of online marketing.”
They Think It’s All Over…
Broadcast players were quick to defend TV, saying that the industry needs to innovate and offer the same kind of interaction and context-relevant interaction that can be found on the Web to tempt back the ad pounds. For Matt Cotton, director of interactive services for content interaction specialist, Mirada, this means linking TV ad space and product placement to the mobile handset.
“The impetus for the changes will have to come from the broadcast industry working with advertisers to build a new platform that creates much more sophisticated links between the broadcast and mobile networks,” said Cotton. “It's all possible and would deliver a significant new lease of life to the broadcast environment.”