Ad agencies give the impression they are clued up about the e-revolution with their dedicated ‘digital’ divisions, but the reality is that online marketing is still treated as an afterthought, giving rise to criticism that marketers have lost touch with the internet generation. By Nathalie Kilby
Developments in the digital arena are already dizzyingly fast, and seem to be picking up pace. Google has launched its first digitised book service, to a chorus of disapproval from authors worried that free downloads will spell the end of the humble paperback. Microsoft has matched the move by announcing a deal with the British Library to make millions of pages of content available in digital format, while Amazon will soon throw its hat into the online book publishing ring.
Rapid change is also taking place in the digital music industry. As a sign of the times advertising agency WCRS last week announced a deal with EMI to form a music-licensing arm. Video games publisher Electronic Arts is to make game soundtracks available online as MP3 files and ringtones through a deal with Nettwerk, while Lycos is gaining access to entertainment portal Contactmusic.
Media mogul Rupert Murdoch has also been building his digital empire, adding online services such as Myspace.com-owner Intermix and broadband provider Easynet to News Corporation. Meanwhile, Microsoft and Google are among the companies fighting over a stake in Time Warner’s AOL internet business.
The burgeoning success of the digital space is hard to ignore, and advertisers seem ready to embrace the medium. WPP Group chief executive Sir Martin Sorrell has warned marketing services agencies that if they steadfastly stick to the traditional 30-second television ad format, remaining blind to the power of online, they risk being seen as dinosaurs.
Online advertising accounts for 5.1 per cent of all UK advertising spend (Internet Advertising Bureau/PricewaterhouseCoopers). In the first six months of 2005 it took a 5.8 per cent share – a year-on-year growth of 62 per cent, eclipsing outdoor’s 5.1 per cent and radio’s 3.6 per cent. The medium finally looks to have come of age.
Widening the net
Television receives 40 per cent of ad spend for an equivalent share of media consumption, newspapers get almost 35 per cent for ten per cent of media consumption, yet the Web’s five per cent achieves a 25 per cent share of media consumption. But the truth is that digital campaigns are not presently at the forefront of planners’ minds. The anomaly is clear and those in the digital world are working hard to push the medium, but the accelerating advances in technology and the shift in consumer behaviour over the last year mean many brand owners and their ad agencies are playing catch-up.
Whether via blogs, podcasts, music downloads, or the recent phenomenon of bands rising to fame through the Web and RSS feeds, consumers are embracing digital media and driving change. Broadband take-up is part of the reason for the cultural shift; UK penetration has reached 53 per cent (Jupiter Research) of internet-enabled households.
Jupiter advertising analyst Julian Smith says customer empowerment is key: “The internet is cate with consumers. They research products online, use price comparison and peer-to-peer sites or blogs to access information. It’s a place to converse and engage. Brands and ad agencies need to evolve, engage consumers and have dialogues with them.”
At a recent Yahoo! roundtable on music and the Net, Universal new media director Rob Wells echoed Sorrell’s call for agencies to evolve. He says Universal has 3 million customers on its database, representing “an active market wanting communication with the brand”. Wells believes many brands and their agencies have yet to realise the true potential of such customers.
“Music is a sexy proposition,” he says. “The popularity of downloads is huge, then there is the iPod, and brands want to associate themselves with the kudos of this arena. But the agencies that control where brands spend their ad budgets aren’t immersed in the digital culture. Invariably they devise a campaign, use a soundtrack but don’t integrate the entire proposition or devise a linked below-the-line strategy.”
Many brands, especially in packaged goods, remain cautious about the capabilities of digital media. One observer says that part of the problem lies in them wanting to stay in the comfort zone of what they know: TV remains the best medium for building brand awareness, while media agencies reap big rewards from the small screen. The issue of “disconnect” was acknowledged by Sorrell at the Internet Advertising Bureau (IAB)’s Engage Conference, when he admitted many traditional groups are run by individuals who “don’t get” the digital phenomenon.
Overture marketing director Karen Salamon agrees, saying that while many networks appeared to be forward thinking when they set up digital arms a few years ago, they have not kept pace. “The separation of online is not the best approach,” she says. “Agencies need to integrate digital strategy from the outset. With the exception of early adopters such as travel and financial services companies, most brands’ online strategy is an afterthought.”
Salamon believes agency networks have been caught out and many are snapping up digital outfits as they realise they have to offer digital, citing Aegis’ acquisition of Glue London as an example. “In the past year there has been recognition of a consumer shift to online, but brands and agencies aren’t reacting quickly enough,” she adds.
Richard Dunmall, managing director of mOne, MindShare’s digital division and part of WPP Group, counters this. He says MindShare has embraced digital since its launch in 1998. But he agrees that reactions among advertising executives have in general been slow. “Online hasn’t helped itself in the past, with issues such as effective measurement,” he says. “It has also suffered from bad publicity and the ‘skateboard culture’: it was perceived to be immature. And it often hasn’t been sold in the right way to clients. But digital is no longer a boring bolt-on.”
Profero UK managing director Wayne Arnold says clients are pushing for innovation: “They are demanding that agencies change their cultural mindset. But the truth is that developments in the digital arena are so fast, all agencies, whether traditional or specialist, have to keep evolving.”
Arnold believes too many media planners do not plan digital – including online, mobile and interactive TV – as an integral part of the campaign strategy. Overture’s Salamon agrees, stressing it is important for clients, planners and buyers to ensure digital is not considered in isolation. IAB chief executive Guy Phillipson echoes this point, adding: “The Net has grown so quickly that it has taken many by surprise. It is not always a core element of campaigns. Online is where consumers make decisions, and agencies need to plan effectively so that different channels work together to drive them online.”
As brands embrace the digital era, the traditional media model is becoming outmoded. Broadband is set to deliver TV and radio through PCs, and as all media gravitate online, digital will be instrumental in revolutionising the advertising industry.â¢