Just where will the rising online ad spend come from?

In any discussion of online marketing, two questions keep coming up how much of my budget should I spend online? and who can I trust to help me answer that question? For some years the digital industrys answer to the first conundrum was to point to the proportion of their media time people were spending online, and suggest that it should be mirrored in the proportion of budget allocated to online channels.

In any discussion of online marketing, two questions keep coming up – “how much of my budget should I spend online?” and “who can I trust to help me answer that question?” For some years the digital industry’s answer to the first conundrum was to point to the proportion of their media time people were spending online, and suggest that it should be mirrored in the proportion of budget allocated to online channels.

That argument seems to be working. The percentage of UK advertising budget spent online has gone up every year, reaching £2bn for 2006 according to PricewaterhouseCoopers and the Internet Advertising Bureau (page 31). What’s behind that seems to be companies experimenting with small sums of marketing budget online, discovering that online does work, and then committing more significant amounts.

But with that money comes a new set of considerations. The first can be seen in the increasing concern about return on investment, and the increasing involvement of procurement departments in pitches. Big budgets demand more scrutiny of how they’re spent and what results they achieve. The second consideration is the question of how to integrate online and offline channels. While there are significant benefits to optimising across digital channels, the big win comes through making onand offline channels work together.

Everywhere you look, agencies talk about offering cross-platform work. Online ad agency Glue London got down to the final stage of the Eurostar pitch, while the latest outdoor campaign for Ikea was done by digital specialist Agency.com. Meanwhile, Bartle Bogle Hegarty recently hired a digital creative team from 20/20, and media agencies Carat and Starcom have reintegrated their digital divisions back into the main body of their operations. Partly, this is because big agencies know they need to be able to offer digital as part of their services, but more it’s because they know most clients want one agency to manage their communications across as many channels as possible.

Alongside this, as the IAB’s head of planning and research Laurence Bird explains in our Agenda piece (page 32), the increasing uptake of interactive media by advertisers is leading to increasing calls for a planning currency to make cross-platform planning “simple and intuitive”. Because in order to take advantage of the integration of online and offline channels, you have to know how they’re working together. You have to be able to compare the performance of the various channels, and how much that performance costs.

That’s the only way to answer the first of those two key questions and to remove the need to ask the second. And as the amount of money spent on online advertising continues to grow, being able to decide where that money should come from becomes ever more important.

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