NewsLine Column: A New Phenomenon In Advertising?
With the advertising downturn putting the squeeze on marketing budgets and companies demanding greater return on investment from their advertising campaigns, Kevin Kerrigan, COO of online tailored directory and search solutions company BTLookSmart, looks at how search targeted marketing is becoming an increasingly attractive option.
“Stuck in a rut” was the Financial Times‘ description of UK advertising revenues in June of this year. The BBC also reported that ITV’s ad sales were in decline, with income from advertising sales dropping by 25% on the same period last year.
The downturn was blamed on cuts in marketing budgets of telecoms and technology companies, car manufacturers and the Government. Dotcom failure, falling stock indices, September 11th, foot-and-mouth and the election were also noted as instigators of the ‘slump’.
During times of uncertainty when business confidence is failing, the first cutbacks to be made are always in advertising budgets. Zenith Optimedia, a media buying group, predicts a worldwide decline in advertising revenues of 0.5% for the year 2002. In addition, companies are increasingly looking for a higher return on their investment from the advertising and promotional campaigns that they do run.
The only sector in the UK Advertising industry currently showing growth is a specialist area within the online advertising sector: search targeted marketing. This form of advertising works by allowing advertisers to have their product or service introduced at the point that an internet user is searching for related products and services on a search engine. This generates a “click-through” to an advertiser’s web site and because it is pre-qualified, generates high conversion rates. This method of advertising is proving so popular as the advertiser only pays for results generated by internet users.
More and more companies are using search targeted marketing because it offers return on investment (ROI) rates that are typically 5-10 times higher than other forms of advertising.
This is proving to be an extremely attractive area for companies to market in as audiences can be targeted so efficiently. For instance, BTLookSmart has a network that reaches such a high proportion of internet users (as many as 64% in the UK alone on MSN, BTopenworld, Tiscali, ntl:home, AltaVista and UK Plus) that companies such as Virgin and Barclaycard are using the service to spread messages and increase brand awareness.
In periods of economic downturn, I believe we will witness a surge by advertisers towards more accountable methods of communication. In the past this would have meant a greater use of traditional direct marketing techniques, but search targeted marketing has been created on the back of consumer internet penetration, and we are seeing in excess of 100% growth year on year in ad revenues in this sector.
Search targeted marketing is catching on so quickly because it puts advertisers and internet users in a win-win situation. Advertisers deliver highly targeted messages with very little wastage and internet users get highly relevant search results returned. This is a model that advertisers find both effective and efficient, and in the current economic climate, are two very attractive features.
If you would like to respond or make further comment on this or any other NewsLine article, please email [email protected]
Subscribers can access previous articles by NewsLine columnists in the Columnist Archive – click button on left.