Cinderella and the online ball

As hot-off-the-press results from the Interactive Advertising Bureau show, online is the real Cinderella of the marketing spend recovery story. Annual expenditure growth, at 80 per cent, was well above estimates.

It’s a picture comprehensively confirmed by the IPA’s Bellwether Report, out this week. It notes that for the ninth quarter in a row, the growth rate of what it calls ‘internet-related’ marketing spend was well above that of other marketing activities.

That’s some momentum, and suggests that online is at last becoming a mainstream communications tool. Of course, some cautionary words are in order. First, the whole marketing services industry, with sales promotion the only notable exception, is currently showing one of the sharpest resurgences on record. This is on the back of probably the strongest corporate profit and margin recovery experienced in 20 years. The surprise, perhaps, is that marketing services has taken so long to show through.

Secondly – it could be objected – online is still a tiny medium: it represents less than three per cent of total UK marketing spend. A growth multiplier of 80 per cent is self-evidently easier to achieve from a low base.

But this maybe misses the point. Online has already overtaken cinema as a medium and it stands approximately where radio was – and not that far behind posters- about a decade ago. But the growth potential for online is, arguably, more dynamic.

Some of the reasons for this are pretty obvious. There is still considerable mileage among consumers for enhanced internet reach, which will be leveraged by the increasing connectivity offered by broadband. Equally, there have been increased efficiencies on the supply side: ads and ad-selling have been substantially standardised; creatives are finally taking online seriously; search engines – now a key means of customer acquisition – are being greatly improved in speed and range. This in turn has led to a surge in ‘traditional’ advertisers turning to the Web as a serious advertising medium. Many – the likes of Argos, Comet and Currys spring to mind – will have been impressed by their own positive experiences of the internet as a channel to market. Others, primarily financial services, were originally attracted by the cost-cutting implications but now see the internet as an indispensable presence, both as channel to market and advertising medium. Finally there are those, such as travel and automotive, which have found in the internet a previously missing link in their retail strategy.

This brings us to an important caveat about the IAB/Bellwether figures, which in a way reinforces the growth story. They do not cover, as yet, such burgeoning online areas as interactive television advertising and mobile telephony. The automotive industry, in particular, is proving a major force in creating iTV credibility accounting, as it does, for about 40 per cent of interactive advertising. The red-button saga has, admittedly, got a long way to go – not least in the area of creativity – but it is unlikely to make a negative contribution to online growth.

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