Radio scalp is just the start for online

The recent spat between the RAB and IAB over which medium now has the biggest share of advertising revenue, though amusing, had an uncomfortably medieval feel about it. Like theologians pedantically counting angels on a pinhead, it missed the point. A more interesting question is how long it will take internet-driven media to overtake outdoor or even bigger media categories, because it can only be a matter of time.

The issue of when, rather than whether, is a fairly comfortable place to pitch camp. After all, the internet, online – call it what you will – is not like other “new” media (for example the pioneering years of commercial television). It is going a step further by redefining how we, as consumers, go to market. To the extent that it succeeds, and bypasses traditional retail interests, it cannot but attract increasing support from advertisers. Hence the mushrooming growth of the search sector.

Rather than comparing it with other media, the story of online stacks up better against the development of the high street store, in particular the department store, during the 19th and early 20th century. As Alan Mitchell points out this week, the modern shop was itself important in defining an emerging consumer market. It provided a staging post for manufactured goods; necessary pre-purchase information (in the form of a preselected display, later supplemented by various types of promotion); and, just as importantly, a trusted mechanism for payment.

The internet threatens to usurp all the comfortable underpinnings of this market structure. To begin with, it has taken consumers’ pre-purchase evaluation to a new level of objectivity, with product and price comparisons, not to mention peer reviews (that highest of recommendations, word of mouth). All this is well ring-fenced from the traditional vehicles of push-centred marketing communications, such as advertising. Nor, any longer, is online use the isolated province of a few geeks. BT has recently feted its five-millionth broadband UK customer, quite a boost on the 200,000 subscribers of just three years ago. According to the head of Pipex, a leading internet service provider, by 2008 the UK will have 11 million people signed up to broadband out of a potential 27 million.

Similarly, the traditional shop is being undermined in the other two functions outlined above. While it won’t cease to be an important destination for the prospective shopper (especially where big-ticket items such as cars are concerned), that will not guarantee a financial transaction. For certain kinds of customer – shopping in certain kinds of category – mail order has long provided an alternative to a direct retail transaction. But the challenge from digital payment systems – their immediacy and range of appeal – is altogether more daunting for the traditional retailer.

Of course, this is not to suggest that clicks and mortar are incompatible. Often they are highly symbiotic: for evidence, look no further than the likes of Tesco and Waitrose. Nevertheless we have glimpsed the power, appeal and – let’s not forget – relatively low cost of internet services that work. It’s easy to see which way the balance of power is swinging.

Stuart Smith, Editor

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