NewsLine Column: The Online Advertising Revolution
Recent figures from the IAB show that levels of online spend during the latter part of 2002 were even greater than during the dotcom boom. However, there is still a certain amount of scepticism towards the medium and Jim Brigden, sales director of Overture UK, calls on marketers to put the past behind them and grab the wealth of opportunities offered by online advertising…
There can be no doubt from recent research that the growth of the online advertising industry is set to rocket.
Growing faster than any other advertising medium, the IAB forecasts UK online advertising spend to reach £387 million in 2003. Search marketing now accounts for 31% of online adspend in the UK – not bad for a business model that didn’t even exist three years ago.
According to Forrester, online advertising spend is forecast to increase by an impressive 79% from 2003 to 2004. Internet advertising has even overtaken cinema advertising and recorded higher growth than any other sector, with a rise of almost 19% last year. To put things in perspective, levels of online spend at the end of 2002 were even greater than at the height of the dotcom boom.
However, the only problem with such fast growth in any industry associated with the internet is an automatic air of scepticism and wariness from the rest of the business community.
One of the biggest obstacles to the growth of online advertising may well lie in its history. We all reminisce about the fantastic halo effect of growth in the online industry in the late 90s and early 2000, but when marketers analysed spend during this period, a discernible return was not evident. The result of a boom in venture capital funding simply led to frenetic marketing activity amongst internet firms to establish their brands. This was not sustainable – the market crashed and suddenly ‘online’ became a dirty word.
Research from respected analyst houses and industry bodies plays a vital role in overcoming the negative associations with ‘online’ that may still exist. In any industry, the communication of updated research figures is imperative for business’ understanding of market trends and for the education of their target audiences. After all, markets can change significantly from year to year. The challenge for organisations publishing research within our industry, of course, is that the market moves at such an inordinately fast pace.
The record growth experienced by our industry is not simply confined to the UK… The IAB estimates European online advertising spend to be worth €787m in 2002 – rising to €5.2 billion by 2006, with online still accounting for the lion’s share of the market. It is this lion’s share that marketers cannot afford to ignore – at Overture, we’re practising what we preach and will be operational in nine European markets by the end of this year.
The incredible versatility of online advertising as a brand building and direct response medium is evident from the growth revolution currently experienced within the industry as a whole. Overture’s position within the digital marketplace has always been that of a direct response model (offering leads that are targeted for the advertiser and timely for the consumer) rather than one with a high emphasis on brand awareness. If its pure brand building you’re after, there are arguably more effective digital models than paid search.
We must not lose sight of the fact that online shopping now represents 6% of all UK retail, growing 19 times faster than bricks-and-mortar retailing in December of last year. With online spend fast catching up on radio, the digital marketplace represents a new industry revolution and land of opportunity for marketers.
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