Online – Keeping Media Afloat
From its humble beginnings to the immense worldwide web of today, the internet has flourished with astonishing rapidity, throwing up new developments, technologies and methods for reaching people with every year that passes. As the company turns 10, IAB chief executive, Guy Phillipson, talks to NewsLine about the medium’s continuing success in an ever-mutable media landscape.
From the explosion of sites like YouTube and MySpace, and the vernacularism of brands like Google and eBay, the online environment is now completely omnipresent.
Recent figures show that online adspend in the UK has passed the £2 billion mark for 2006, whilst 31 million people are connected to the internet (source: GfK NOP) (see UK Internet Advertising Spend Grows 41%).
What lies ahead in the online or digital landscape for media owners, agencies, advertisers and indeed consumers is not known, but the inevitability of changes is palpable, with some unfolding at a greater pace than predicted.
It’s online that the industry has to thank for keeping its stable mates afloat, says Phillipson. “If the internet hadn’t grown [last year] then the whole advertising market would have gone backwards to the tune of £600 million,” he states. “The internet was propping up the media market.”
This more than 40% hike in online’s development in 2006 has largely been fuelled by search, which despite having seen its growth rate slow from 79% in 2005 to 52% in 2006, is still powering ahead.
Classifieds saw a 45% upturn, whilst display rose 35%. This, according to Phillipson, could be put down to more rich media being bought, such as video streaming, which command higher cost per thousand.
The IAB has high hopes for 2007 also, despite the obvious enormity of the task of growing from the remarkable sum of £2 billion. “I think we can put on £500 or £600 million in a year,” remarks the IAB chief.
“Online is a big medium – it’s more than half the size of TV. To grow at 40% again would be a fantastic performance. By putting on between £500 and £600 million that’s like adding the annual revenue of radio in one year onto what’s already there. But when we look at the trends we think that’s perfectly possible,” he assures.
Traditional media, we are told, is on its last legs, whilst companies like Google engulf the smaller minnows in the pond as their tentacles reach further a field.
Adspend for traditional owners is moving online, particularly in terms of press, says Phillipson. “If [traditional media owners] are losing revenues from, say, their newspapers and magazines, they will have to work hard to make them up online, but it’s possible and there are plenty of examples of success stories,” he adds, citing the Guardian in particular as one of these triumphs.
The key is to think of using all disciplines – video, podcast, UGC, even blogging, to reach communities, he believes. “Rather than thinking ‘we have a newspaper and a website and we might have mobile one day’, it should be ‘how can we touch our readers and our community wherever they are and however they want to consume our media brand’ and to think of the search engines as friends.”
Aside from the obvious extension of traditional media’s digital arms, another indelible mark on the online landscape is Google – the search giant with modest student beginnings that has now become a global brand phenomena with fingers in an increasing variety of pies.
Turning over more than £870 million in the UK in online advertising last year, a whopping proportion of the £1.1 billion that’s spent overall, the key to the success of Google lies with brand strength and distribution portals, says Phillipson.
Despite the dominance, and the moves into display with the acquisitions of YouTube (see Google Buys YouTube) and DoubleClick (see Plans For Google’s Future Vision Revealed), Phillipson believes there is now some exciting activity coming from the search giant’s rather sizeable competitors.
“For the foreseeable future I’m sure Google will have the majority of the share,” he admits. “Then as we move into mobile, well there’s a new battlefield. But I wonder whether because it’s a fairly even playing field at the moment in mobile, whether Yahoo! and MSN and co. will try and bridgehead that so that the shares in search aren’t quite so skewed in that medium?”
Online video and the growth of display are incredibly significant, says Phillipson, with these key areas for advertisers and media owners showing no signs of abating.
“As people [continue to] take up faster broadband speeds and they get used to using video, then online is a proper two-way entertainment medium and it’s fantastic for progressive display advertising and that will grow and grow,” he comments.
“The change is now coming because of the new things that we can do with online particularly in the area of video and rich media,” he continues.
“When we present to advertisers and agencies, we’re at pains to remind them that 27% of people’s media time is online, it’s the second most popular medium in the household next to TV, and in fact TV and online work rather well together if you extend a campaign onto online.”
Phillipson believes that 2007/2008 will see a rise in spend on FMCG products, with video playing an increasingly important role as it continues to prove itself twice as effective for brand awareness than standard online advertising.
“The key is that you can encourage dwell time from consumers online because they can interact and play around with the things that you’ve created. That dwell time translates to greater consideration and purchase intent,” he said.
“What’s also just grown the habit of video is YouTube – over 50% of video viewing online is YouTube at the moment. We’re all very comfortable just clicking on a vid and watching a vid for five or six minutes or clicking out of it and searching for the stuff we want.”
More and more people are getting used to watching video, particularly with the sound on believes Phillipson, whilst advertisers will increasingly learn how to use the medium to its full advantage, working out optimal running times.
At the same time agencies are going to have to learn how to make campaigns that will operate across TV and online and maybe other digital formats as well, admits Phillipson, who was named 2005’s Digital Person of the Year.
“It’s got a very healthy future and that can only boost the display figures. ”
However, he warns that traditional media and creative agencies now have to reassess their business models and how they operate, because “so much work is going the way of digital pure play agencies”.
Whilst advertisers and brands carry on embracing new technologies and methods, and making online a more significant part of planning, increasingly these groups are searching for measurement and accountability.
Phillipson is heavily involved in JICIMS, the Joint Industry Committee for Internet Measurement Systems. This rather clunky acronym is set to solve concerns that the industry has been vocal about for some time (see Single Planning Currency For The Internet Is ‘Absolutely Necessary’).
The four trade bodies that have come together – the IAB, AOP, ISBA and the IPA – are working to find a good, effective planning currency for the internet.
“JICIMS is working right now to look at the requirements across the industry – from advertisers’ point of view, the buyers at the media agencies’ point of view, and indeed the media owners’ requirements to look at what the optimum system ought to be and to try and make it as good value as possible,” explains Phillipson.
The group is aiming for something that is affordable and achievable, but he admits this is going to take some time. “It could be 18 months by the time it’s tendered, launched, tested and out there, but we believe it’s definitely something the industry needs.”