The advertising Association’s (AA) Long Term Advertising Expenditure Forecast, published by the World Advertising Resource Center, is usually a pretty hohum sort of affair. Generally speaking, total advertising spend rises with with economic growth. It falls a bit faster during economic downturns and rises a touch quicker during prosperous times. But that’s about as far as it goes. The trick is to forecast an economic growth rate of, say, 2.6% per annum, factor in a quota of cyclical activity, and extrapolate.
When you do this, the results are pretty predictable. As one article analysing the report has explained, alarmist stories about a gloomy future for advertising are unfounded: the AA is predicting 36% real advertising growth in the UK over the next ten years. TV advertising is set to grow by 22%, not decline.
But now read the rest of the report. Here, in a careful, downplayed, matter-of-fact manner, you will find a description of a revolution unfolding before your very eyes. Within five years, the AA’s forecasts tell us, 50 years of advertising history will be overturned as the internet beats TV into second place as the biggest single advertising medium. Direct mail, which has increased its share of total marketing spend consistently year after year, will now see its share of the total fall, equally consistently. National newspapers (especially the qualities), regional newspapers, and trade magazines are set for a deepening, endemic business model crisis as job and property classified advertising migrates to the Net; recruitment advertising in the printed media is expected to decline by 60-70% over the next 12 years.
But palpitation-inducing forecasts such as these are water off a duck’s back for the business-as-usual brigade. Take Andrew Harrison’s article in Marketing Week two weeks ago (All is not as it seems in the old vs new media landscape, MW February 1). The real structural shift in marketing, he argued, is the shift in funds from media advertising to point-of-purchase trade spend. Compared to this, investing in new media is just "digitally rearranging the deckchairs on the Titanic while marketers shop at Tesco". Besides, if you look at the nature of advertising on the Net, most of it goes on search, which "is not brand building". It is just "paying money so your entry in the global phone book is more prominent".
Andrew’s message? Real brands are built by real (ie display) advertising in traditional media, whose audiences still beat the likes of MySpace and YouTube into the shade and will continue doing so for the foreseeable future. So what’s all the fuss about?
Now. Let’s assume that in times of rapid change there are some important areas of continuity. Brand advertising via traditional media is going to continue for some time, so advertising on TV and other media such as radio and cinema will keep on growing. And it will do so relatively free of competition from the internet because the Net in its current form is not as powerful a display vehicle. (The AA’s forecast shows the Net’s share of total display advertising rising from 4% to a modest 10% over the next 12 years).
Yet, by that time, the internet will also be the biggest advertising medium by far. What does this mean? Does it matter? Not much, if you agree with Andrew Harrison. Search, which currently dominates internet advertising, is "the online equivalent of paying for the sandwich board on Oxford Street," he writes in his article. Much better to "bypass the expense altogether" by getting consumers to tap your brand’s name directly into the http field.
For this to happen, however, consumers have to be confident that the brand’s website will offer them the best, most relevant, easy-to-use and useful information of all possible information sources. For them not to search elsewhere, they will also have to be convinced it will address all their information needs, completely and comprehensively. They will also have to trust that the information it provides will be truly unbiased and trustworthy. Not advertising as we know it, then.
In fact, likening search to a sandwich board on a high street, or to an online yellow pages, completely misses its significance. Search is a new ball game because it is changing how consumers acquire the information they use to make purchasing decisions, and where they acquire this information from.
Search is driven by the information agenda of the consumer, rather than the seller. To consistently win attention in a search environment, you must become the most sought after information source, just as winning the custom of the customer in a shop means you have to offer the best possible value. Rising to the challenge of search means that brands have to reinvent themselves as information services that offer superior information value in their own right. That’s quite a shift in perspective, and shows how dangerous and misleading the "search = online classifieds" assumption is.
Closely connected to this is what people are using the internet for. Andrew is absolutely right to stress that the internet is a "not a medium, it is a delivery platform". We go online to search for information, to send mail, to buy things, to be entertained, to administer bank accounts, to chat, to benefit from participation in a community – a whole host of things that often have nothing to do with traditional media consumption or advertising.
This takes us in two possible directions. The first one says: "Therefore, only a small part of this activity generates audiences for advertising". The second says: "Just because it’s not time spent consuming entertainment, doesn’t mean it’s not a chance to communicate". In future, for example, one of the most cost-effective ways for advertisers to reach their customers might not be via traditional media advertising at all, but via the retail, product review and price comparison sites that customers visit when considering purchases. As this trend accelerates, Andrew’s "structural" shift of ad spend to trade spend in packaged goods could look like small beer.
Put these two factors together – the rise of search and the internet as a delivery platform, not a medium – and we have a different communication environment. In this environment, previous one-to-one correlations of media audiences with audiences for advertising are being severed, and once-clear distinctions between display and classified, between advertising and other forms of information provision, and between retail and media are blurring. The more they blur, the more old statistics and measures, based on old distinctions, lose their meaning. If you focus solely on the old categories and the old measures, you won’t see the blurring. But understanding the blur is what it is all about.