After 20 years as a client buying media – old and new, great campaigns, stinkers – there are four questions I have frequently been asked in my first few weeks on the media-owner side of the industry. So, before I get brain-washed by the system, here they are.
Is the current advertising downturn cyclical or structural?
Both. The real structural decline – the elephant in the room – is the shift of marketing funds in the past decade into point-of-purchase (PoP): from marketing director to sales director. Brand investment in PoP – in major supermarkets for packaged goods brands, in showrooms for car manufacturers, in refits and redesigns (think of all those packaged goods marketers now at the banks and retailers) – has drained away funds that would traditionally have gone into the advertising pot. Much of this spending is healthy, and part of successful brand building, but it’s not all good news. For every marketing director who waxes lyrical about investment at the PoP – at “the moment of truth” – there’s another who knows the real truth: he’s been mugged by the retailer. The total media spend on this sector dwarfs any growth digital has brought in. Scary.
The cyclical change, of course, is investment in “new” media at the expense of the “old” – digitally rearranging the deckchairs on the Titanic while marketers shop at Tesco. I think this is cyclical – not structural – because digital will co-exist with (and not be replaced by) broadcast in a dynamic media future, and because the answers to some of the difficult digital questions (like the following) will begin to surface.
What are the new media?
All marketers feel they’re at the cutting edge investing in new media (and always see a totally unproven online idea as merely part of the “learning” process), but over-exuberance does not equal understanding. We are only now learning that all forms of digital activity are not created equal. Most of us clump the various aspects of digital together in a box, as if it were a coherent medium like TV, press or radio. But the internet is not a medium – it’s a delivery platform. In the real world, the directory (search) is not the same as the post (e-mail) is not the same as the classifieds (price comparison websites). The fact they are all available at home doesn’t make your letterbox a medium any more than the internet is. It’s a platform to access great content, much like the Sky Plus box, or DAB radio.
Smart marketing directors and media agencies will realise this and begin to break down the lump of exponential digital revenue growth into more meaningful and comparable bites (or should that be bytes?). Some applications will grow, some will decline, some will disappear – rather like the dynamic ecology of old media; and as they do, marketers will work out that the internet reduces time spent on old chores (grocery shopping, visiting the bank branch) rather than on old media.
What is search advertising?
The vast majority of digital revenues are in search. But search is not brand-building. Search is paying money so your entry in the global phone book is more prominent. Over time, brand managers will realise this and bypass the expense altogether. This will happen inexorably. Great brands will use old media to develop recognition so that their brand name is typed directly into the http field. Great brands will use new media to ensure the search engines naturally find their brands (“let your spiders do the walking”) for free. Search is the online equivalent of paying for the sandwich board on Oxford Street – occasionally useful in an over-congested shopping mall – but wouldn’t you rather invest in a brand strong enough to attract shoppers to your store directly?
How big is Web 2.0?
User-generated content, entertainment sites, uploads, downloads – it’s amazing teenagers still have time for spots and girlfriends. The truth is that none of us knows how big this will become. But I do know two things. First, we’ve all been here before: TV will kill radio, the video will kill TV, the Walkman will kill the record industry, the iPod will kill the games console. My hunch is that, when the real work starts to be done, user-generated content will be a part, but only a small part, of the marketer’s armoury, and probably the most difficult to access because, by definition, it’s user-generated not advertiser-generated. Second, it’s not as big as you might think. In fact, it’s tiny. Look hard at the average minutes per week spent in various activities in the table below. Look at weekly reach for broadcast media, which is three or four times the best monthly reach of the top user-generated websites. They will grow, but they’ll need to grow 50 or 60 times to match the combination an advertiser can get in reach and hours from TV or radio today.
Andrew Harrison is chief executive of the RadioCentre. You can contact Andrew at firstname.lastname@example.org